a

GAO

United States General Accounting Office

Report to Congressional Requesters

October 2002 TRAVEL CARDS

Control Weaknesses 

Leave Army 

Vulnerable to Potential 

Fraud and Abuse

GAO-03-169
Page i GAO-03-169 Army Travel Cards

Contents

Letter 1

Results in Brief 3

Army Has Highest Delinquency and Charge-off Rates but Recent 

Actions Have Resulted in Some Improvements 8

Potentially Fraudulent and Abusive Travel Card Activity 23

Weak Overall Control Environment and Ineffective Travel Card 

Program Controls 39

Statistical Tests of Key Control Activities 53

Conclusions 59

Matter for Congressional Consideration 60

Recommendations for Executive Action 60

Agency Comments and Our Evaluation 64

Appendixes

Appendix I: Background 68

Appendix II: Objectives, Scope, and Methodology 81

Appendix III: Army Major Command Delinquency Rates 89

Appendix IV: Army Personnel Grade, Rank, and Associated Basic Pay 

Rates 90

Appendix V: Comments from the Department of Defense 91

Tables Table 1: Cumulative Charge-offs and Delinquencies by Military 

Service as of March 31, 2002 10

Table 2: Examples of NSF Checks Written on Charged-off 

Accounts 25

Table 3: Examples of Abusive Activity Where the Account Was 

Charged Off 29

Table 4: Examples of Abusive Activity Where the Cardholders Paid 

the Bill 34

Table 5: Average Ratio of Cardholders to APCs at Army Sites 

Audited 43

Table 6: Results of Testing of Key Internal Controls 54

Table 7: Comparison of Number of Individually Billed Travel 

Cardholders and Related Charges for DOD Versus Total 

Federal Government for Fiscal Year 2001 69

Table 8: Population of Fiscal Year 2001 Travel Transactions at Army 

Units Tested 85
Contents

Page ii GAO-03-169 Army Travel Cards

Table 9: Estimate of Fiscal Year 2001 Transactions That Failed 

Control Tests for Approved Travel 86

Table 10: Estimate of Fiscal Year 2001 Transactions That Failed 

Control Tests for Accurate Travel Voucher Payments 87

Table 11: Estimate of Fiscal Year 2001 Transactions That Failed 

Control Tests for Timely Submission and Processing of 

Travel Vouchers 87

Table 12: Army Major Command Delinquency Rates (by Quarter) for 

the 2 Years Ending March 31, 2002 89

Table 13: Army Military Grades, Ranks, and Associated Basic Pay 

Rates for Fiscal Year 2001 90

Table 14: Army Civilian Grades and Associated Basic Pay Rates for 

Calendar Year 2001 90

Figures Figure 1: Army, Non-Army DOD, and Civilian Agency Travel Card 

Delinquency Rates for the 2-Year Period Ending March 31, 

2002 11

Figure 2: Army Delinquent and Total Outstanding Travel Card 

Balances by Military Grade and Total Civilian Populations 

as of September 30, 2001 13

Figure 3: Fiscal Year 2001 Army Charge-offs by Military Grades and 

Total Civilian Populations 14

Figure 4: Army Travel Card Charge-off and Recovery History from 

October 1, 2000, to March 31, 2002 19

Figure 5: The Army Travel Process 72

Figure 6: Travel Card Application 74

Figure 7: Required Army and Bank of America Delinquency 

Process Management Actions 78
Page 1 GAO-03-169 Army Travel Cards

United States General Accounting Office

Washington, D.C. 20548

A

October 11, 2002 Letr

The Honorable Charles E. Grassley

Ranking Minority Member 

Committee on Finance 

United States Senate 

The Honorable Stephen Horn 

Chairman

The Honorable Janice D. Schakowsky

Ranking Minority Member 

Subcommittee on Government Efficiency, Financial Management 

and Intergovernmental Relations 

Committee on Government Reform 

House of Representatives 

On July 17, 2002, we testified1

 before the Subcommittee on Government 

Efficiency, Financial Management, and Intergovernmental Relations, House 

Committee on Government Reform, on the results of our audit of internal 

controls over travel activity associated with about 430,000 individually 

billed Army travel card accounts, and $619 million in related travel card 

charges for fiscal year 2001. The individually billed travel card program is 

significantly different from the purchase card program in that the 

cardholder is directly responsible for all charges incurred on his or her 

travel card account and the monthly bill is sent to the cardholder for 

payment. The cardholder is responsible for submitting a properly 

documented voucher and is reimbursed by the Army for all valid expenses 

related to official government travel. In contrast, all purchase card charges 

are billed directly to the government for monthly payment. The intent of 

the travel card program was to improve convenience for the traveler and to 

reduce the government’s costs of administering travel. Appendix I provides 

additional background information on the Army’s travel card program. 

This work was performed in response to your request for a comprehensive 

examination of the Department of Defense’s (DOD) and the military 

services’ purchase and travel card programs. This report provides details 

and results of our Army travel card audit, which was summarized in our 

recent testimony.

1

U.S. General Accounting Office, Travel Cards: Control Weaknesses Leave Army Vulnerable 

to Potential Fraud and Abuse, GAO-02-863T (Washington, D.C.: July 17, 2002).
Page 2 GAO-03-169 Army Travel Cards

The objectives of our audit of the Army’s travel card program were to 

determine (1) the reported magnitude and impact of delinquent and 

charged-off Army travel card accounts for fiscal year 2001 and the first 6 

months of fiscal year 2002, along with an analysis of related causes and 

DOD and Army corrective actions, (2) whether indications existed of 

potentially fraudulent and abusive activity2

 related to the Army travel card 

during fiscal year 2001, and (3) the effectiveness of the overall control 

environment and key internal controls for the Army’s travel program. We 

analyzed the Army’s account delinquency and charge-off information and 

compared it to non-Army DOD components and other federal agencies. In 

addition, we evaluated the adequacy of selected, specific internal control 

policies, procedures, and activities at four Army installations, representing 

3 of the Army’s 13 major commands.

We selected the four installations we audited based on the relative amount 

of travel card activity, the number and percentage of accounts past due, 

and the number and percentage of accounts charged off. For these 

installations, we tested a statistical sample of travel card transactions and 

conducted other audit work to evaluate the design and implementation of 

key internal control procedures and activities. Our statistical sample test 

results can be projected only to the individual installations where we 

performed the testing and cannot be projected to the command level or to 

the Army as a whole. Through auditing travel card transactions at the four 

installations and data mining of fiscal year 2001 transactions incurred by 

units throughout the Army, we identified numerous examples of potentially 

fraudulent and abusive travel card activity. However, our work was not 

designed to identify, and we cannot determine, the extent of potentially 

fraudulent and abusive activity. 

2

We defined potentially fraudulent activity as any scheme, or pattern of activity, related to 

the use of a travel card in apparent violation of federal or state criminal code. For purposes 

of this report, the only cases we characterized as potentially fraudulent were those where 

cardholders wrote three or more nonsufficient fund checks, or wrote checks on closed 

accounts to pay their Bank of America bills. These cases are potentially fraudulent because 

they indicate a pattern of activity in apparent violation of one or more elements of federal or 

state criminal code. In addition, for purposes of this report, we considered abusive travel 

card activity to include (1) personal use of the card—any use other than for official 

government travel—regardless of whether the cardholder paid the bill and (2) cases in 

which cardholders were reimbursed for official travel and then did not pay Bank of 

America, and thus benefiting personally. Some of the travel card activity that we 

categorized as abusive would be potentially fraudulent if it can be established that the 

cardholder violated any element of federal or state criminal code.
Page 3 GAO-03-169 Army Travel Cards

We conducted our audit work from December 2001 through July 2002 in 

accordance with U.S. generally accepted government auditing standards, 

and we performed our investigative work in accordance with standards 

prescribed by the President’s Council on Integrity and Efficiency. We 

received comments on a draft of this report from the Under Secretary of 

Defense (Comptroller) dated September 30, 2002. We addressed DOD’s 

comments in the “Agency Comments and Our Evaluation” section and 

reprinted them in appendix V. See appendix II for details on our scope and 

methodology.

Results in Brief For fiscal year 2001, the Army had significant breakdowns in key internal 

controls over individually billed travel cards. These breakdowns 

contributed to the significant delinquencies and charge-offs of Army 

employee account balances and potentially fraudulent and abusive activity 

related to the travel card. The breakdowns resulted primarily from a weak 

overall control environment, flawed policies and procedures, and a lack of 

adherence to valid policies and procedures.

We found substantial delinquencies and charge-offs of Army travel card 

accounts during fiscal year 2001, and delinquencies continued into the first 

half of fiscal year 2002. Upon receipt of their travel cards, all cardholders 

are required to sign a statement of understanding that the card is to be used 

only for authorized official government travel expenses. Most Army 

cardholders properly used their travel cards and paid amounts owed to 

Bank of America timely. However, we found that the Army’s delinquency 

rate is higher than that of any other DOD component or executive branch 

agency in the federal government. For the eight quarters ending March 31, 

2002, the Army’s delinquency rate fluctuated between 10 and 18 percent, 

and on average was about 5 percent higher than the rest of DOD and 7 

percent higher than federal civilian agencies.

In addition, from November 1998 through March 2002, over 23,000 Army 

travel card accounts totaling about $34 million were charged off by Bank of 

America. Our analysis of available data shows a correlation between 

delinquency problems and the travel cardholder’s age and pay grade. We 

found that the Army’s delinquency and charge-off problems are primarily 

associated with young, low- to midlevel enlisted military personnel. In 

addition, a weak control environment compounded by instances of delays 

in processing travel reimbursements to Army military and civilian 

personnel contributed to the high delinquency rates. These delinquencies 

and charge-offs have cost the Army millions of dollars in lost rebates, 
Page 4 GAO-03-169 Army Travel Cards

higher fees, and substantial resources spent pursuing and collecting past 

due accounts.

The Army and DOD have taken action to address and focus command- and 

installation-level attention on management of delinquent travel card 

accounts. Beginning in November 2001, the Army began offsetting wages 

of certain military and civilian employees and the retirement benefits of 

military retirees who had either delinquent or charged-off accounts. These 

and other actions have begun to significantly reduce the number and dollar 

value of charge-offs during fiscal year 2002. However, these actions are 

primarily focused on treating the symptoms or “back-end” problems, such 

as delinquencies and charge-offs, rather than the “front-end” or 

preventative controls, such as the weak overall internal control 

environment and specific travel program control weaknesses.

Our work identified numerous instances of potentially fraudulent and 

abusive activity related to the travel card. During fiscal year 2001, about 

1,200 of the over 4,200 Army account holders who had written at least one 

nonsufficient funds (NSF) check to pay their travel card bill had their 

accounts charged off. In the same period, more than 200 cardholders 

whose accounts were eventually charged off may have also committed 

bank fraud by writing three or more NSF checks to Bank of America. In 

one case, an Army employee, who had been convicted for writing NSF 

checks prior to receiving the government travel card, wrote over 86 NSF 

checks to Bank of America. Further, as part of our statistical sampling 

results at the four sites we audited, we estimated that personal use of the 

travel card ranged from 15 percent of fiscal year 2001 transactions at one 

site to 45 percent at another site. Cardholders used their travel cards for a 

wide variety of personal goods or services. For example, government 

travel cards were used for adult entertainment; dating and escort services; 

casino and Internet gambling; cruises; tickets to musical and sporting 

events; personal clothing; closing costs on a home purchase; and, in one 

case, the purchase of a used automobile. We found that charged-off 

accounts included those of both (1) cardholders who were reimbursed by 

the Army for official travel expenses but failed to pay Bank of America for 

the related charges, and thus pocketed the reimbursement, and (2) those 

who used their travel cards for personal purchases for which they did not 

pay Bank of America.

We also found several instances of abusive travel card activity where Army 

cardholders used their cards at establishments, such as gentlemen’s clubs, 

which provide adult entertainment. Further, in some cases, these clubs 
Page 5 GAO-03-169 Army Travel Cards

were used to convert the travel card to cash by supplying cardholders with 

actual cash or “club cash” for a 10 percent fee. To illustrate, a cardholder 

who charged $330 to the government travel card at one of these clubs 

would receive $300 in cash. Subsequently, the club receives a 

reimbursement from Bank of America for a $330 restaurant charge. For 

fiscal year 2001, we identified about 200 individuals who charged almost 

$38,000 at these establishments. For example, we found that one 

cardholder obtained more than $5,000 in cash from these establishments.

We found little evidence of documented disciplinary action against Army 

personnel who misused the card. Further, in many cases, evidence was 

lacking that Army travel program managers or supervisors were even 

aware that Army personnel were using their travel cards for personal use. 

For example, a civilian employee working at the Pentagon on a classified 

program used her travel card for personal purchases of $3,600 and 

subsequently wrote two NSF checks for over $7,700 to Bank of America. 

The cardholder’s account was subsequently charged off when the 

cardholder failed to pay the bill. The employee’s supervisor was not aware 

of any potentially fraudulent and abusive activity related to the travel card. 

In another example, a California National Guard employee with a $5,400 

charge-off associated with authorized travel, for which the Army 

reimbursed the cardholder, was subsequently promoted from Major to 

Lieutenant Colonel.

In addition, we found that 38 of 105 travel cardholders we reviewed who 

had their accounts charged-off still had active secret or top-secret 

clearances as of June 2002. Some of the Army personnel holding security 

clearances who have had difficulty paying their travel card bills may 

present security risks to the Army. Army regulations provide that an 

individual’s finances are one of the key factors to be considered in 

determining whether an individual should continue to be entrusted with a 

secret or top-secret clearance. However, we found that Army security 

officials were unaware of these financial issues and consequently could not 

consider their potential effect on whether these individuals should 

continue to have security clearances. 

Our audit found that weaknesses in the Army’s overall control 

environment, including a number of specific controls that were either 

flawed in their design or in their implementation, are the root causes of the 

Army’s inability to prevent and/or effectively detect the numerous 

instances of potentially fraudulent and abusive travel card related activity 

previously discussed. Our work demonstrated that the Army has not 
Page 6 GAO-03-169 Army Travel Cards

provided for an adequate control infrastructure—primarily human capital 

related—to effectively manage its travel card program. At the four units we 

audited, we found that management was focused primarily on 

delinquencies and often only after severe problems were discovered and 

major commands began demanding improved performance in reducing 

such delinquencies. There were few indications that management 

emphasized controls designed to prevent or provide for early detection of 

travel card misuse. 

Our audit of seven controls relied on to manage the Army’s travel card 

program revealed critical weaknesses. For example, many problems we 

identified were the result of ineffective controls over issuance of travel 

cards. Although DOD’s policy allows exemptions from the use of travel 

cards for certain groups or individuals, we found that without exception 

the Army issued travel cards to all personnel who requested cards 

regardless of their travel or credit history. We found a significant 

correlation between travel card fraud, abuse, and delinquencies and 

individuals with substantial credit history problems. The prior and current 

credit problems we identified for Army travel cardholders included 

charged-off credit card and automobile loans, defaulted and foreclosed 

home mortgages, bankruptcies, and convictions for writing NSF checks.

Also, agency program coordinators (APC), who have the key responsibility 

for managing and overseeing travel cardholders’ activities, are essentially 

set up to fail in their duties because they are given substantial 

responsibility for a large number of cardholders—for example up to 1,000 

cardholders per APC—and little time to do this collateral duty. Military 

personnel who are responsible for and rated on other job responsibilities—

such as airport security—are given the APC role as “other duty as 

assigned.” With a high level of APC turnover (particularly military APCs, 

which at the locations we audited were reassigned about every 6 months), 

and only minimal time allotted to perform this collateral duty, we found 

that APCs generally were ineffective in carrying out their key travel card 

program management and oversight responsibilities. 

Further, our statistical tests of key internal controls and processes in place 

at four Army locations showed errors in travel voucher processing that 

resulted in both overpayment and underpayment of the amounts that 

travelers should have received for their official travel expenses. In 

addition, substantial delays in travel reimbursements contributed to the 

high delinquency rates for at least one of these locations. Delays in 

reimbursement were often due to the traveler not submitting a travel 
Page 7 GAO-03-169 Army Travel Cards

voucher within the required 5 days of completion of travel, and/or the 

paying office not making payment within the required 30 days. We also 

found a substantial number of California National Guard employees and 

several employees at other units audited who should have been paid late 

fees for late reimbursements. However, the Defense Finance and 

Accounting Service (DFAS) does not have the systems in place to identify 

late payments and thus reported that it made no late fee payments for fiscal 

year 2001. 

This report includes a matter for congressional consideration that would 

provide DOD the ability to require the split disbursement payment process 

for all of its employees. We also provide recommendations to the Army to 

strengthen the overall control environment for the Army’s travel card 

program and improve internal controls. Our recommended actions are in 

the areas of travel card issuance; monitoring, review, and disciplinary 

actions; and travel voucher and payment processes. 

In written comments on a draft of this report, DOD concurred with 23 of 

our recommendations and partially concurred with the remaining 3 

recommendations and described actions completed, under way, or planned 

to implement them. DOD partially concurred with our recommendations 

regarding (1) training APCs to refer cardholders who write NSF checks for 

disciplinary actions, (2) establishing an Army-wide disciplinary action 

policy for abusive travel card activity, and (3) developing a process to 

identify travel reimbursements that exceed the 30-day requirement so that 

individuals not paid within the statutory period are paid late fees in 

accordance with the law. With regard to the first two issues, DOD’s 

response indicated that they have taken or plan to take actions that we 

believe will address the intent of our recommendations. With regard to the 

third issue, DOD agreed that the current systems for processing and 

computing travel vouchers for the Army do not provide for automated 

means of calculating interest due on voucher payments exceeding the 30-

day requirement. DOD also stated that the Defense Travel System (DTS) 

currently being deployed automates the voucher submission process and 

should reduce the instances where reimbursements extend beyond 30 

days. However, according to the DOD Office of Inspector General, DTS 

remains at high risk of not being an effective solution in streamlining the 

DOD travel management process and is not expected to be deployed until 

fiscal year 2006. Based on this evaluation, we do not consider DTS to be a 

timely or viable solution for identifying those reimbursements outside of 

the 30-day requirement. We continue to recommend that, until DTS is fully 

implemented and operational, DOD develop an interim process to identify 
Page 8 GAO-03-169 Army Travel Cards

late reimbursements and pay cardholders the appropriate fees in 

accordance with the law.

In addition, in one area, although DOD concurred with our 

recommendation, we do not believe that its response indicates full 

agreement or understanding of the intent of the recommendation. 

Specifically, with regard to our recommendation that credit check results 

be used to make decisions on travel card applicants, DOD responded that 

those with prior credit problems are issued a restricted card and that 

mandatory use of the government travel card is required by TTRA. This is 

not correct. Both the DOD FMR and TTRA provide for exemptions from 

the mandatory use requirements under certain conditions, including 

evidence of financial irresponsibility. We continue to believe that until the 

Army takes action to consider past credit problems in determining whether 

to issue government travel cards, it will continue to increase the risk that 

individuals will repeat a pattern of fraud, abuse, and delinquency or 

nonpayment. 

Finally, in concurring with our recommendations regarding the lack of 

segregation of duties and other voucher processing problems at the 

California Army National Guard, DOD indicated that it had a number of 

detective and compensating controls in place. While these appear 

responsive to our recommendations, we have not evaluated the 

effectiveness of their implementation and therefore cannot determine 

whether these measures will resolve the problems we identified.

Army Has Highest 

Delinquency and 

Charge-off Rates but 

Recent Actions Have 

Resulted in Some 

Improvements 

The Army’s travel card delinquency rate and amounts charged-off are 

substantially higher than non-Army DOD components and civilian agencies 

in the federal government. Cumulative Army charge-offs since the 

inception of the travel card program with Bank of America in November 

1998 are nearly $34 million. Our analysis of available data shows the travel 

cardholder’s age and pay rate are strong predictors of delinquency 

problems. We found that the Army’s delinquency and charge-off problems

are primarily related to young, low- and midlevel enlisted military 

employees. Further, as discussed in the following sections of this report, 

weaknesses in the Army’s overall control environment and delays and 

errors in processing and paying valid travel vouchers exacerbate the 

Army’s delinquency problems. The Army’s high delinquency and default 

rates have also resulted in contentious relations with Bank of America. 

The bank threatened to end its participation in the program, but eventually 

agreed to contract modifications that included increased fees. The 
Page 9 GAO-03-169 Army Travel Cards

delinquencies and charge-offs have cost the Army, the federal government, 

and the taxpayers millions of dollars in lost rebates, higher fees, and 

substantial resources spent pursuing and collecting on past due accounts.

The Army has taken a number of positive actions to address its high 

delinquency and charge-off rates, and results from the first half of fiscal 

year 2002 show a significant drop in charged-off accounts. Most of this 

reduction is attributable to a salary and military retirement offset 

program—similar to garnishment. These offsets began in November 2001. 

Other Army actions included encouraging the use of a split disbursement 

payment process, in which DFAS sends a portion of the traveler’s 

reimbursement directly to the bank rather than the cardholder, and 

increased management attention and focus on the delinquency issue. The 

Army’s actions, however, primarily address the symptoms or “back-end” 

result of delinquency and charge-offs after they have already occurred. As 

noted in the remaining sections of this report, the Army’s control 

weaknesses that are the root cause of the problem are generally related to 

the “front-end” management of the travel card program, such as issuing the 

cards and overseeing the proper use of the cards.

The Army’s Delinquencies 

and Charge-offs

Since the inception of the travel charge card task order between DOD and 

Bank of America on November 30, 1998, Bank of America has charged off 

over 23,000 Army travel card accounts with nearly $34 million of bad debt. 

As of March 31, 2002, over 11,000 Army cardholders had $8.4 million in 

delinquent debt. The amount of delinquencies and charge-offs at the Army 

is the highest in DOD. Table 1 provides a comparison of cumulative 

charge-offs and delinquencies by military service as of March 31, 2002.
Page 10 GAO-03-169 Army Travel Cards

Table 1: Cumulative Charge-offs and Delinquencies by Military Service as of 

March 31, 2002

a

Cumulative charge-offs and recoveries are from November 1998 through March 2002.

b

Recoveries represent amounts recovered through collection actions on accounts that have been 

charged off by Bank of America. 

c

Delinquencies represent amounts not paid within 60 days of the travel card monthly statement closing 

date, which is the cutoff date for charges to be included in the monthly statement. Under the terms of 

the travel cardholder’s agreement with Bank of America, payment of the travel card statement is due to 

Bank of America within 25 to 30 days of the statement closing date.

d

Includes Marine Corps.

Source: GAO analysis of Bank of America and General Services Administration data. 

Figure 1 compares delinquency rates3 among the Army, non-Army DOD 

components including the other military services, and the 23 largest civilian 

agencies.4

Dollars in millions

DOD 

service

Total

cumulative

charge-offsa

Cumulative

recoveriesa, b

Net

cumulative

charge-offsa

Delinquencies

as of March 31,

2002c

Army $33.5 $12.9 $20.6 $8.4

Air Force 11.6 4.7 6.9 5.0

Navyd 16.6 6.2 10.4 6.0

3

Throughout this report, we calculated delinquency rates using the proportion of dollars of 

accounts delinquent to the total dollars of accounts outstanding according to industry 

standards set by the Federal Financial Institutions Examination Council.

4

The civilian agencies included in our analysis are the 23 executive branch agencies covered 

under the Chief Financial Officers (CFO) Act, as amended by the Government Management 

Reform Act.
Page 11 GAO-03-169 Army Travel Cards

Figure 1: Army, Non-Army DOD, and Civilian Agency Travel Card Delinquency Rates 

for the 2-Year Period Ending March 31, 2002

Source: GAO analysis of General Services Administration data.

As of March 31, 2002, the Army had the highest delinquency rate in the 

federal government. Army’s delinquency rate over the last 2 years 

fluctuated between 10 and 18 percent, and on average was about 5 percent 

higher than the other non-Army DOD components and about 7 percent 

higher than the federal civilian agencies.5

 According to Army officials, the 

nature of the Army’s mission, which includes extensive travel for extended 

periods in remote, often hostile locations around the world, contributes, at 

least in part, to the Army’s high delinquency rate. Appendix III provides a 

breakdown of the Army’s delinquency rates by major command.

5

We did not analyze in detail the reason that the Army delinquency rates are substantially 

higher than those of the non-Army DOD component delinquencies. However, we will be 

issuing separate reports that include analysis of delinquency rates for the departments of 

the Navy and the Air Force.

0

2

4

6

8

10

12

14

16

18

20

2000 

3rd qtr.

2000

4th qtr.

2001 

1st qtr.

2001 

2nd qtr.

2001 

3rd qtr.

2001 

4th qtr.

2002 

1st qtr.

2002 

2nd qtr.

Army delinquency rate

DOD delinquency rate excluding Army

Governmentwide delinquency rate excluding DOD

Percentage

Fiscal year
Page 12 GAO-03-169 Army Travel Cards

Age and Pay Grade Are 

Correlated to Delinquency 

and Charge-off Problems

A number of factors contributed to the Army’s high delinquency rates. 

Many of the problems related directly to the control environment at the 

Army and at the sites we visited. Other problems related to the 

implementation of the travel card program and a lack of controls over 

travel card use and travel processing. A detailed discussion of the control 

environment and specific internal control issues is provided in the 

following sections of this report. Without proper management control, 

demographics such as the age and pay rates of Army personnel also 

contributed to delinquencies and charge-offs.

Our analysis of available data showed that there was a correlation between 

certain demographic factors and high delinquency and charge-off rates. 

According to Army representatives, and based on our analysis, most Army 

travel cardholders responsible for delinquencies and charge-offs were 

young (generally married), low- and midlevel enlisted military personnel 

(E-1-privates to E-6-staff sergeants),6

 with relatively low incomes and little 

experience in handling personal finances. If these individuals get into 

financial difficulty, they have fewer resources at their disposal to pay their 

travel card balances in full every month.

6

Appendix IV provides a description of each of these military grades and their associated 

military rankings and pay, along with corresponding civilian grade and pay data.
Page 13 GAO-03-169 Army Travel Cards

Figure 2: Army Delinquent and Total Outstanding Travel Card Balances by Military Grade and Total Civilian Populations as of 

September 30, 2001

Source: GAO analysis of Bank of America data.

In the Army, grades E-1 through E-6 account for about 73 percent of all 

military personnel. Consequently, it is not surprising that they have the 

highest outstanding travel card balance. As shown in figure 2, the travel 

cardholder’s grade (and associated pay) is a strong predictor of 

delinquency problems. We found that the Army’s delinquency and chargeoff problems are primarily associated with young, low- and midlevel 

enlisted military personnel with basic pay levels ranging from $11,000 to 

$26,000. Delinquency rates were as high as 40 percent and 25 percent for E1 to E-3 and E-4 to E-6, respectively, compared to Army civilians whose 

delinquency rate is consistent with rates for federal civilian agencies, as 

shown in figure 1.

As shown in figure 3, personnel in grades E-1 through E-6 account for about 

$8 million of the $10 million in total Army charge-offs for fiscal year 2001.

0

5

10

15

20

25

E1- E3 E4- E6 E7- E9 O1-O3 O4-O6 O7-O10 WO1-WO5 Civilian

Grade/classification

Dollars in millions

Delinquent

Total outstanding balance
Page 14 GAO-03-169 Army Travel Cards

Figure 3: Fiscal Year 2001 Army Charge-offs by Military Grades and Total Civilian 

Populations 

Source: GAO analysis of Bank of America data.

Enlisted personnel in the E-1 to E-6 grade level range in rank from privates 

to staff sergeants, respectively, and receive basic pay ranging from $11,033 

to $26,253. Although these basic pay rates are supplemented with amounts 

such as housing and food allowances, these salaries may not permit 

payment of excessive personal charges on travel cards. Also, if cardholders 

in these lower grade levels do not receive their travel card reimbursements 

promptly because of either delays in filing their vouchers or in voucher 

processing, they may lack the financial resources to make timely required 

payments on their travel card accounts. Further, as discussed later, 

because of the Army’s failure to take any action to exempt personnel with 

poor credit histories from required use of travel cards, these low- and 

midlevel enlisted military personnel are often issued travel cards even 

though they may already be in serious financial trouble and, therefore, may 

not have been appropriate credit risks. The failure to provide proper 

training and monitoring of travel card use, as well as maintain firm credit 

limits, may also have exacerbated the delinquency rates for these 

individuals.

Dollars in millions

0

1

2

3

4

5

6

8

7

E1-E3 E4-E6 E7-E9 O1-O3 O4-O6 O7-O10 WO1-

WO5

Civilian

Grade/classification
Page 15 GAO-03-169 Army Travel Cards

High Delinquency and 

Charge-off Rates Have 

Resulted in Increased Costs 

to the Government 

Although the bank generally absorbs the losses associated with 

delinquencies and charge-offs, this problem has significant consequences 

to the Army. The high delinquency and charge-off rates resulted in 

increased costs in terms of increased fees imposed by Bank of America 

following a contract dispute with DOD and the loss of potential refunds 

associated with the program. Other costs are real but not easily 

measurable, such as the increased administrative burden to the Army 

associated with additional resources required to address delinquent and 

charged-off accounts. For example, to effectively manage the travel card 

program, employees with delinquent accounts must be identified, 

counseled, disciplined, and closely monitored. In addition, employees with 

financial problems who also have access to sensitive data may pose a 

security risk, as discussed later in this report. While most employees 

properly manage their travel card accounts and pay their bills on time, the 

high delinquency and charge-off rates may undermine the professional 

image of the Army and its personnel.

Dispute between Contractor and 

DOD 

Unexpectedly high defaults by DOD’s travel cardholders, including the 

Army’s, resulted in a 5-month legal dispute with DOD’s contractor, Bank of 

America, over the continuation of the travel card contract. In 1998, under 

the provisions of the General Services Administration’s (GSA) master 

contract with Bank of America, DOD entered into a tailored task order for 

Bank of America to provide travel card services for a period of 2 years, 

ending November 29, 2000. Under the terms of the task order, DOD had 

three 1-year options to unilaterally renew the Bank of America contract. 

On September 29, 2000, prior to the expiration of the initial task order, DOD 

gave notice to Bank of America that it intended to exercise its option to 

extend the task order for an additional year. In November 2000, Bank of 

America contested the provisions of the DOD task order with the GSA 

contracting officer. Bank of America claimed that the task order was 

unprofitable because of required “contract and program management 

policies and procedures” associated with higher-than-anticipated credit 

losses. Bank of America officials estimated that 43,000 DOD employees 

defaulted on more than $59 million in debts. Bank of America only agreed 

to drop its legal dispute with DOD after GSA renegotiated the terms of the 

master contract and DOD renegotiated the related tailored task order for 

travel card services in April 2001. Specifically, under the renegotiated 

master contract and related task order Bank of America was able to reduce 

its financial risk by instituting additional fees, such as higher cash advance 

and late payment fees; offsetting credit losses against rebates; facilitating 

the collection of delinquent and charged-off amounts through salary and 
Page 16 GAO-03-169 Army Travel Cards

military retirement pay offset; and participating in the split disbursement 

payment process, in which the government pays the bank directly.

Effect of Increased Fees One of the terms of the renegotiation of the task order between Bank of 

America and DOD was an increase in travel card cash advance fees from 

1.9 percent to 3 percent, or $2, whichever would be the higher fee amount, 

effective August 10, 2001. The Army reimburses cash advance fees7

incurred by a traveler while on authorized travel. We estimate that this 

contract modification will result in approximately $1.4 million of increased 

costs to the Army each year for the reimbursement of cash advance fees. 

Our estimate was made by applying the increase in the advance fees to cash 

advances made during fiscal year 2001. Other fee increases agreed to in the 

renegotiation increased the cost to the Army, such as the fee for expedited 

travel card issuance, and to delinquent cardholders, such as the increase in 

late fees from $20 to $29.

7

Cash advance fees are also referred to as automated teller machine (ATM) fees. ATMs 

allow cardholders to withdraw cash with a travel card. For each cash advance withdrawal, 

cardholders are charged a fee of a set amount or percentage of the amount of the 

withdrawal.
Page 17 GAO-03-169 Army Travel Cards

Delinquent Account 

Payment Affects Rebates to 

the Army 

The GSA master contract modification also changed the rebate calculation, 

making it imperative that the Army improve its payment rates to receive the 

full benefits of the program. Under the GSA master contract, credit card 

companies are required to pay a quarterly rebate, also known as a refund, 

to agencies and GSA as a result of a combination of both individually billed 

and centrally billed card usage. The rebate to the agency is reduced, or 

eliminated, if significant numbers of an agency’s individual cardholders do 

not pay their accounts timely. Specifically, credit losses or balances that 

reach 180 calendar days past the closing date on the statement of account 

reduce the rebate amounts. Effective January 2001, one of the terms of the 

contract modification changed the way that rebates are calculated and how 

credit losses are handled. If the credit loss of an agency’s individually 

billed travel card accounts exceeds 30 basis points—or 30 one-hundredths 

of a percent (.003)—of net sales8

 on the card, the agency is assessed a 

credit loss fee, or rebate offset, against the rebate associated with both 

individually billed and centrally billed travel card accounts.

This credit loss fee, or rebate offset, which resulted solely from individually 

billed account credit losses, significantly affected the amount of rebate that 

the Army received as a result of combined individually and centrally billed 

net sales in fiscal year 2001. The Army collected approximately $635,000 of 

the $3 million in rebates for fiscal year 2001 that we estimated that the 

Army would have received, based on fiscal year 2001 dollar volume, had 

individually billed account payments been timely. Prior to the change in 

the way the rebates were calculated, in fiscal year 2000, the Army received 

approximately $2.7 million in rebates from the travel card program, net of 

$450,000 that was paid to GSA for an industrial funding fee (contract 

administration fee).

GSA receives a contract administration fee of four basis points or four onehundredths of a percent (.0004)—of net sales on both the individually and 

centrally billed accounts. For fiscal year 2001, GSA received approximately 

$485,000 for the Army’s net sales. Bank of America pays this fee to GSA 

regardless of whether the agency or service receives any rebates. For 

example, for the last three quarters of fiscal year 2001, the Army had 

negative rebates after the credit loss fees were deducted and GSA received 

approximately $386,000 from Bank of America for those three quarters. 

8

Net sales consist of all purchases and other charges less any credits, such as returns, other 

than payments to the accounts. Other charges include ATM use, traveler’s checks, and any 

other fees.
Page 18 GAO-03-169 Army Travel Cards

The negative net rebates are carried over to subsequent quarters until they 

can be offset by positive net rebates that the agency earns.

Army and DOD Have Taken 

Some Steps to Reduce 

Delinquencies and Chargeoffs, but Additional Actions 

Are Needed

The Army has taken a number of positive actions to address its high 

delinquency and charge-off rates, and results from the first half of fiscal 

year 2002 show a significant drop in charged-off accounts. Most of this 

reduction may be attributed to a salary and military retirement payment 

offset program—similar to garnishment. This program began to offset 

amounts from delinquent cardholders’ salaries and military retirement 

benefit payments in November 2001. Other Army actions include a limited 

split disbursement payment plan, in which DFAS disburses a portion of a 

travel reimbursement directly to the bank (instead of disbursing the entire 

amount of the reimbursement to the cardholder), and increased 

management attention and focus on the delinquency issue. The Army’s 

actions, however, primarily address the symptoms or “back-end” result of 

delinquency and charge-offs after they have already occurred. As noted in 

the remaining sections of this report, the Army has significant control 

weaknesses, particularly with respect to the front-end management of the 

travel card program, such as issuing the cards and overseeing the proper 

use of the cards, which it has not yet effectively addressed.

Charge-offs Have Decreased As shown in figure 4, the Army’s charge-offs have decreased substantially.
Page 19 GAO-03-169 Army Travel Cards

Figure 4: Army Travel Card Charge-off and Recovery History from October 1, 2000, 

to March 31, 2002 

Source: GAO analysis of Bank of America data.

Specifically, although Army delinquency rates have not changed 

substantially in the last 2 years, the total dollars charged off by Bank of 

America have decreased for each of the last four quarters. Figure 4 also 

shows that recoveries of charge-offs increased markedly in the second 

quarter of fiscal year 2002. The primary causes of the decrease in chargeoffs and recent increase in recoveries are DOD’s new salary and military 

retirement benefit offset program as well as other positive steps, including 

encouraging the use of split disbursements and increased management 

focus and attention.

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2001 

1st qtr.

2001 

2nd qtr.

2001 

3rd qtr.

2001 

4th qtr.

2002 

1st qtr.

2002 

2nd qtr.

Dollars in millions

Charge-offs

Charge-off recoveries

Fiscal year
Page 20 GAO-03-169 Army Travel Cards

Salary and Military Retirement 

Offset Program

Starting in fiscal year 2002, DOD began to offset the salary of certain 

civilian and military employees and retired military members for all 

services, including the Army, for the amounts delinquent or charged off on 

travel card accounts. The DOD salary offset program9

 implements a 

provision of the Travel and Transportation Reform Act of 1998 (TTRA)10

that allows any federal agency, upon written request from the travel card 

contractor, to collect by deduction from the amount of pay owed to an 

employee (or military member) any amount of funds the employee or 

military member owes to the contractor, as a result of delinquencies not 

disputed by the employee, on his or her travel card.11 

With the task order modification, DOD agreed with Bank of America to 

implement an offset program. From April 2001 through August 2001, DOD 

worked with the Bank of America to establish protocols and to set up the 

program. In August 2001, Bank of America sent demand letters to 

cardholders with accounts over 90 days delinquent. DFAS processed the 

initial offsets of delinquent accounts in October 2001 in the various DOD 

pay systems. The first deduction was made from the November pay period. 

Collections were paid to Bank of America starting in early December 2001. 

Bank of America can also use the offset program to recover amounts that 

were previously charged off. January 2002 was the first month in which 

Bank of America requested offsets for charged-off accounts.

The process takes approximately 2 months from initiating the offset 

through payment to the bank. Specifically, after 90 days delinquency, Bank 

of America sends a demand letter to the individual cardholder that requests 

payment in full within 30 days. The demand letter provides for initiating 

offset if payment is not made in full within 30 days. The cardholder may 

negotiate an installment agreement or may dispute the charges with the 

bank. The cardholder has a right to review all records, such as invoices, 

and to request a hearing if he or she is not satisfied with the bank’s 

disposition of the dispute. 

9

DOD’s salary offset program includes individuals’ salaries paid by DOD through its active 

duty, reserve, and civilian pay systems, and retirement benefits paid through its military 

retirement pay system.

10Sec. 2(d), Public Law 105-264, 112 Stat. 2350 (5 U.S.C. 5701 note).

11Cardholder debts to Bank of America are not subject to the Debt Collection Improvement 

Act of 1996, which is limited to the collection of certain debts owed the federal government. 
Page 21 GAO-03-169 Army Travel Cards

After the 30 days have passed, if payment is not made and the cardholder 

does not dispute the debt, the bank includes the account in the list of 

accounts requested for offset. Individuals in the following categories 

cannot be accepted for offset.

• Civilian employees in bargaining units that have not agreed to offset 

cannot be accepted. According to a DFAS official, as of the end of April 

2002, 789 of 1,227 DOD bargaining units have agreed.

• Individuals with debts to the federal government or other garnishments 

already being offset at 15 percent of disposable pay are considered to be 

in protected status and are not eligible for the offset program. 

• Individuals who cannot be located in the various payroll and military 

retirement (active, reserve, retired military, or civilian) systems cannot 

be accepted for offset.

• Civilian retirees are not currently subject to offset. The authorizing 

statutes for both the Civil Service Retirement System12 and the Federal 

Employee’s Retirement System13 specify that retirement benefits may be 

offset only to the extent expressly authorized by federal statutes. TTRA, 

Section 2, provides authority to offset salaries of “employees” of 

agencies but does not provide such authority for civilian employee 

retiree annuitants.

Once an individual is accepted for offset, the related debt is established in 

the respective pay system and DFAS can deduct up to 15 percent of 

disposable pay. Disposable pay is defined in GSA’s Federal Travel 

Regulation14 as an employee’s compensation remaining after the deduction 

from an employee’s earnings of any amounts required by law to be withheld 

(e.g., tax withholdings and garnishments). The amounts collected are paid 

to the bank monthly for military personnel and retirees and biweekly for 

civilian personnel. 

According to DFAS, from October 2001 through April 2002, Bank of 

America referred 49,014 DOD-wide cases with debt of $72.4 million to DOD 

125 U.S.C. section 8346.

135 U.S.C. section 8470.

1441 C.F.R. section 301-54.2. 
Page 22 GAO-03-169 Army Travel Cards

for offset. DOD accepted and started offset for 73 percent of the cases and 

68 percent of the debt amounts referred. The number and debt amount of 

Army cases forwarded by Bank of America were not available. From 

November 2001 through April 2002, DFAS collected $6.3 million from Army 

military and retired military members through the offset program. DFAS 

was unable to provide the amount of collections for civilian employees by 

military service. However, the amount of total collections from November 

2001 through April 2002 for civilian employees of DOD services and 

agencies was about $702,000.

Split Disbursement Payment 

Process

DOD has recently encouraged cardholders to make greater use of the split 

disbursement payment process. This payment method, by which 

cardholders elect to have all or part of their reimbursement sent directly to 

Bank of America, has the potential to significantly reduce delinquencies. 

Split disbursements are a standard practice of many private sector 

companies. DOD reported that for about 27 percent of the travel vouchers 

paid in April 2002 at one of its major disbursing centers, cardholders 

elected this payment option. 

However, the use of the split disbursement payment process by employees 

is currently voluntary, as shown by DOD’s low participation rate. The 

defense authorization bill for fiscal year 2003 passed by the Senate would 

change this by authorizing the Secretary of Defense to require that any part 

of an employee’s travel allowance be disbursed directly to the employee’s 

travel card issuer for payment of official travel expenses. The defense 

authorization bill for fiscal year 2003 passed by the House does not contain 

comparable authority. As of early October 2002, the bill (H.R. 4546) was in 

conference.

Management Focus and 

Attention

In response to the excessive delinquency rate, in October 2000, the Vice 

Chief of Staff of the Army issued a directive to cut the Army’s delinquencies 

by 50 percent by the end of March 2001. Further, the Vice Chief of Staff 

established a goal of a delinquency rate of no more than 4 percent of active 

cardholders as soon as possible and ordered commanders throughout the 

Army to provide additional attention to the government travel card 

program.15 Army officials emphasized setting goals, monitoring results, 

15For performance measurement purposes, the Army is calculating delinquency rates using 

the number of delinquent accounts compared to the total number of active accounts. The 

dollar amount method we used is the industry standard and is also used by the CFO Council 

and by the DOD Charge Card Task Force. 
Page 23 GAO-03-169 Army Travel Cards

providing feedback, providing training, and coordinating efforts with DOD 

and Bank of America. We have also seen increased management attention 

and focus on reducing delinquencies at the Army command level. For 

example, commanders at both Ft. Bragg locations we audited told us they 

hold monthly meetings to discuss the status of any outstanding 

delinquencies and related corrective actions. 

Further, the DOD Under Secretary of Defense (Comptroller) created a 

DOD-wide Charge Card Task Force in March 2002 to address management 

issues related to DOD’s purchase and travel card programs. The task force 

issued its final report on June 27, 2002. We have reviewed the report and 

believe that many of the actions proposed by the task force will improve 

the controls over the travel card program. For example, as previously 

discussed, we support the provision of the fiscal year 2003 defense 

authorization bill that would authorize DOD to require the use of the split 

disbursement payment process. If enacted and required DOD-wide, this 

authority has the potential to significantly reduce DOD’s and the Army’s 

delinquency rates. Other important task force recommendations include 

canceling inactive accounts and expanding the salary offset program. 

However, actions to implement additional “front-end” or preventive 

controls, such as strengthening the critical role of the APCs and denying 

cards to individuals with prior credit problems, were not addressed in the 

report. We believe that strong preventive controls will be critical if DOD is 

to effectively address the high delinquency rates and charge-offs, as well as 

the potentially fraudulent and abusive activity discussed in this report. 

Potentially Fraudulent 

and Abusive Travel 

Card Activity

Our review identified numerous instances of potentially fraudulent and 

abusive activity associated with the Army’s travel card program during 

fiscal year 2001. Failure to implement controls to reasonably prevent such 

transactions can increase the Army’s vulnerability to additional 

delinquencies and charge-offs. As discussed previously, about $34 million 

associated with over 23,000 Army accounts was charged off since the 

inception of the travel card program with Bank of America.

We considered any scheme or pattern of activity related to the use of the 

travel card, in apparent violation of federal or state criminal code, as a 

potentially fraudulent activity. For purposes of this report, the only cases 

we characterized as potentially fraudulent were those where cardholders 

wrote three or more NSF checks or wrote checks on closed accounts to 

pay their Bank of America bills. These cases are potentially fraudulent 

because they indicate a pattern of activity in violation of one or more 
Page 24 GAO-03-169 Army Travel Cards

elements of federal or state criminal codes. In addition, some of the travel 

card activity that we categorized as abusive may be fraudulent if it can be 

established that the cardholder violated any element of federal or state 

criminal codes.

For purposes of this report, we considered abusive travel card activity to 

include (1) personal use of the cards—any use other than for official 

government travel—regardless of whether the cardholders paid the bills 

and (2) cases in which cardholders were reimbursed for official travel and 

then did not pay Bank of America and thus benefited personally.

Potentially Fraudulent 

Transactions

Our review identified numerous examples of potentially fraudulent activity 

where the cardholders wrote checks against closed checking accounts or 

repeatedly wrote NSF, or “bounced,” checks as payment for their travel 

card accounts. Knowingly writing checks against closed accounts or 

writing three or more NSF checks may be bank fraud under 18 U.S.C. 

1344.16 Further, it is a violation of the Uniform Code of Military Justice 

(UCMJ)17 article 123a when a soldier makes, draws, or utters (verbally 

authorizes) a check, draft, or order without sufficient funds and does so 

with intent to defraud. During fiscal year 2001, of the over 4,200 account 

holders who wrote NSF checks, close to 1,200 Army personnel had their 

accounts charged off. In the same period, more than 200 personnel whose 

accounts were eventually charged off may have committed bank fraud by 

writing three or more NSF checks to Bank of America. Table 2 shows the 

10 cases we selected for review where the cardholders wrote three or more 

NSF checks to Bank of America, and whose accounts were charged off due 

in part to repeated use of NSF checks.

16Bank fraud is defined by 18 U.S.C. 1344 as any execution of, or attempt to execute, a 

scheme or artifice to defraud a financial institution or to obtain any of the moneys, funds, 

credits, assets, securities, or other assets owned by, or under the custody or control of, a 

financial institution, by means of false or fraudulent pretenses, representations, or 

promises. 

17UCMJ is a federal law enacted by the Congress. UCMJ articles 77-134 are known as 

“punitive offenses,” that is, specific offenses which, if violated, can result in punishment by 

court-martial.
Page 25 GAO-03-169 Army Travel Cards

Table 2: Examples of NSF Checks Written on Charged-off Accounts

a

Serious delinquency is defined as 90 or more days past due on payment submission.

b

These included referrals to collection agencies for unpaid bills from utility companies, cable 

companies, and department stores.

Source: GAO analysis.

Cardholder

Total

amount

(number)

of NSF

checks in

FY 2001

Total

amount

charged off Grade Unit Credit history/problems

Documented follow-up/ 

disciplinary action

1 $269,301

(86)

$35,883 E-6 Ft. Jackson Criminal conviction for writing 

NSF checks and serious credit 

card delinquencya

 prior to card 

issuance.

Undergoing courtmartial.

2 12,327

(8)

7,942 O-3 Ft. Hood None. None.

3 7,737

(4)

3,257 GS -13 Pentagon Charge-offs and referrals to 

collection agenciesb

 and serious 

credit card delinquencies prior to 

card issuance.

None. Bank of America 

account paid in full after 

we identified it as a 

charge-off.

4 6,099

(3)

7,373 GS-12 Ft. McPherson Serious credit card 

delinquencies prior to card 

issuance. Mortgage foreclosure 

and other charge-offs and 

referrals to collection agencies 

since card issuance.

Counseled. 

Salary offset program.

5 3,995

(3)

5,259 E-7 West Virginia 

ROTC

Bankruptcy judgment, 

automobile repossession, and 

serious delinquencies prior to 

card issuance.

Letter of reprimand. 

Salary offset program.

6 4,845

(11)

3,380 E-6 Ft. Hood Referrals to collection agencies 

prior to card issuance.

None.

7 2,709

(3)

7,846 E-4 Ft. Drum/ 

Ft. Lewis

Prior charge-off and referral to 

collection agency.

Administrative discharge 

for misconduct directly 

related to misuse of the 

travel card.

8 900

(5)

3,104 E-3 Ft. Drum None prior to travel card 

issuance. Automobile 

repossession and delinquencies 

since 2000.

None. Honorable 

discharge.

9 840

(3)

2,137 E-7 Army National 

Guard Utah

Serious delinquencies prior to 

card issuance.

None.

Salary offset program.

10 263

(3)

2,763 GS-5 U.S. Army 

Europe 

Referral to collection agency and 

serious delinquency before card 

issuance.

Counseled.

Salary offset program.
Page 26 GAO-03-169 Army Travel Cards

Eight of the 10 cardholders included in table 2 had significant credit 

problems prior to card issuance, such as charged-off credit card accounts 

and automobile loans; mortgage foreclosures; bankruptcies; serious 

delinquencies; referrals to collection agencies for unpaid utility bills, 

medical fees, and department store accounts; and, in one case, prior 

criminal convictions for writing NSF checks. The remaining two had 

similar credit problems subsequent to issuance of Bank of America travel 

cards. These examples are illustrative of many of the breakdowns in the 

management and oversight over the Army travel card program, as 

discussed in the following sections of this report. The following provides 

detailed information on some of these cases. 

• Cardholder #1 was a staff sergeant who wrote 86 NSF checks totaling 

almost $270,000 for payment on his Bank of America travel card account 

for charges incurred when the cardholder was not on official 

government travel. This cardholder had a previous criminal record for 

writing NSF checks. The cardholder also had numerous other financial 

problems, including mortgage foreclosure and claims discharged in 

December 2001 for Chapter 7 bankruptcy. Among the claims discharged 

in bankruptcy was a $2,199 claim on the cardholder’s previous 

government travel card issued by American Express and a $114,750 real 

estate loan. This cardholder applied for and received a new Social 

Security number when he legally changed his name in 1998, and since 

then has had two Social Security numbers—one under each name. The 

individual authorized a credit check at the time of his application for a 

government travel card from Bank of America. However, it appeared 

that the credit check was not performed and the individual was issued a 

standard card with a $10,000 limit in April 1999, instead of a restricted 

card with a $2,500 credit limit. 

From July 1999 through November 2000, the cardholder wrote 

approximately 86 NSF checks—some on closed or invalid accounts—to 

Bank of America. Industry regulations require that an account be 

credited immediately upon receipt of a check. Consequently, when 

Bank of America posted the NSF checks, the account appeared to have 

been paid, which provided credit to the cardholder to make additional 

purchases. Thus, by writing successively larger NSF checks, which 

Bank of America credited to his travel card account, the staff sergeant 

was able to, in effect, successively increase his credit limit to over 

$35,000—a practice known as “boosting.” He used each of these 

successive increases in his effective credit limit to charge additional 

items on his travel card. Despite the 86 NSF checks and associated 
Page 27 GAO-03-169 Army Travel Cards

increases in the cumulative unpaid balance on the cardholder’s 

government travel card account, records we obtained indicate that Bank 

of America did not close this individual’s account until February 2001, 

when the account was charged off. The cardholder was undergoing 

court-martial in late May 2002 for NSF checks related to his Bank of 

America account as well as to the Army and Air Force Exchange 

Services. Bank of America acknowledged that it erred in not closing this 

account sooner. This has resulted in the bank changing its policy to 

require accounts to be closed when a cardholder has written three NSF 

checks. 

• Cardholder #3 currently works at the Pentagon as a GS-13 employee on 

a classified program. Because of her position, the cardholder has a topsecret clearance. Prior to applying for the Bank of America travel card, 

the employee had credit problems, including several charged-off 

accounts. Because the employee did not authorize a credit check on her 

travel card application, she was given a restricted card with a credit 

limit of $2,500, which should have been issued in “inactive” status and 

only activated when needed for travel. However, Bank of America 

records showed that in July 2000, immediately after receiving the travel 

card, the employee used the card to pay for a personal move and other 

charges totaling more than $3,600—more than $1,000 in excess of the 

credit limit on restricted travel cards. The cognizant APC told us that 

while a credit check authorization should have been done for the 

cardholder to exceed the $2,500 credit limit, she could not confirm that 

one was done in this case. 

In addition, from October 2000 through September 2001, the employee 

wrote four NSF checks totaling more than $7,700 to Bank of America. 

The cardholder’s account had an unpaid balance of $3,257 at the time it 

was charged off in September 2001. Although the cardholder had a 

restricted card that should have been activated only for the first official 

travel, the fact that she was able to use the card immediately upon 

issuance while not on travel indicated that Bank of America issued the 

card in an “active” status. Shortly after our investigators contacted this 

cardholder, she paid her account balance in full. 

We also found that no disciplinary action had been taken against this 

individual. The two APCs were not aware that the employee had 

problems with her account, much less that the account was charged 

off, until contacted by our investigators. The APCs told us they had 

little time to devote to reviewing the over 500 individual accounts for 
Page 28 GAO-03-169 Army Travel Cards

which they had oversight responsibilities assigned as a collateral duty. 

In addition, while, according to a Bank of America official, APCs have 

had access to NSF check information in its database since 2000, one of 

the APCs told us she only recently received training on how to identify 

delinquent accounts in Bank of America’s database. 

• Cardholder #6 exhibited a pattern of writing NSF checks about once a 

month. During fiscal year 2001, the cardholder wrote 11 NSF checks to 

Bank of America that ranged from $250 to $630. Some checks were 

written to pay charges that appeared to be for personal travel. The 

cardholder’s account balance of $3,380 was charged off in February 

2002. Further, when the cardholder was assigned from Ft. Hood, Texas, 

to the U.S. Army Recruiting Command in Tampa, Florida, her travel card 

account was not transferred and assigned to the APC responsible for 

travel card oversight in her new unit. Consequently, the APC in Florida 

was not aware of the cardholder’s problems because the cardholder did 

not appear in any of the Recruiting Command’s delinquency reports. 

Abusive Travel Card Activity We found instances of abusive travel card activity by Army cardholders that 

covered charges for a wide variety of personal goods and services, 

including cruises; sports and music event tickets; personal clothing items; 

casino and Internet gambling; transactions to obtain cash at adult 

entertainment establishments; and, in one case, the purchase of a used 

automobile. There should be no misunderstanding by Army personnel that 

personal use of the card is not permitted. The standard government travel 

card used by most Army personnel is clearly marked, “For Official 

Government Travel Only” on the face of the card. 

In addition, all Army travel card applicants sign a statement that provides, 

in part, that “I also understand that I am authorized to use the card only for 

those necessary and reasonable expenses incurred by me for official 

travel.” As part of our statistical sampling tests of travel card activity at 

four Army locations, we estimated that 15 percent to 45 percent of the 

fiscal year 2001 travel card transactions at those locations appeared to be 

for charges not related to official travel and, therefore, were abusive. 

Further, abusive use of the card related to failure to pay Bank of America 

was the result of (1) cardholders who were reimbursed for official travel 

and then did not pay Bank of America and (2) cardholders who used the 

card for personal charges and failed to pay Bank of America. 
Page 29 GAO-03-169 Army Travel Cards

Travel Card Abuse due to Failure 

to Pay Bank of America Charges

Our work at four case study sites and our Army-wide data mining identified 

numerous examples of abusive travel card use where cardholders failed to 

pay their travel card bills. This abusive activity included (1) authorized 

transactions incurred in conjunction with approved travel orders where the 

cardholders received reimbursement but did not pay the bills, leading to 

charge off of the cardholders’ accounts, or (2) transactions incurred by 

cardholders that were not associated with approved travel orders where 

unpaid accounts were also charged off. In all cases, we found that 

ineffective monitoring contributed to charge-offs. Specifically, many APCs, 

commanders, and supervisors did not effectively monitor travel card usage 

or address delinquencies timely. We found little documentation indicating 

that the APCs, commanders, and supervisors were aware of the problems 

with individual cardholders, conducted follow-up, and took appropriate 

disciplinary actions. Table 3 provides examples of the two types of abusive 

transactions related to nonpayment and the related follow-up and 

disciplinary actions.

Table 3: Examples of Abusive Activity Where the Account Was Charged Off 

Cardholder Grade Unit 

Total

charged-off

amount

Transactions 

contributing to 

charge-off Credit history/problems 

Documented 

follow-up/

disciplinary action

1a GS-12 Ft. McPherson $7,373 Used reimbursed travel 

money for closing costs 

on a house. Wrote NSF 

checks.

Serious credit card 

delinquencies prior to travel 

card issuance; mortgage 

foreclosure and other chargeoffs and referrals to collection 

agencies since 2000.

Counseled; salary 

offset.

2b E-7 ROTC 5,259 $4,100 to Budget-RentA-Car for purchase of a 

used automobile.

Bankruptcy judgment, 

automobile repossession, and 

serious delinquencies prior to 

travel card issuance,

Letter of reprimand. 

Salary offset. 

3 E-6 Army Forces 

Command 

2,278 $110 in “club” cash 

from Spearmint Rhino 

Adult Cabaret.

Serious credit card and other 

delinquencies prior to travel 

card issuance.

None.

4 E-4 Army Reserve 

Command

1,253 $500 to Cryptologic, 

Inc. by spouse for 

Internet gambling.

Numerous referrals to collection 

agencies prior to travel card 

issuance.

None.

5 O-5 California 

National 

Guardc

5,419 Did not use 

reimbursement to pay 

travel card charges.

Serious delinquencies, 

including delinquency on the 

American Express government 

travel card, prior to travel card 

issuance.

Salary offset.c
Page 30 GAO-03-169 Army Travel Cards

a

Same as NSF case #4.

b

Same as NSF case #5.

c

See disciplinary action section for a discussion of this cardholder.

Source: GAO analysis.

Similar to individuals who wrote NSF checks, many of the 105 cardholders 

that we reviewed whose accounts were charged off had significant prior 

credit problems, such as charged-off credit card account balances and 

automobile loan defaults, and referrals to collection agencies. Many of 

these individuals experienced further credit problems, including mortgage 

foreclosure, after issuance of the government travel card. As shown in 

table 4, some charged-off accounts resulted from the use of the card for 

transactions that were not proper travel expenses covered by valid travel 

orders, while others resulted from official travel expenses that were 

reimbursed but the cardholders failed to pay the bills. The magnitude and 

range of abusive transactions reflect the poor control environment and 

other internal control weaknesses discussed later in this report. The 

following include details of some of these.

• Cardholder #1 was a GS-12 employee in Army Forces Command at Ft. 

McPherson, Georgia. In August 2000, the cardholder used the card to 

pay for authorized charges associated with a permanent change of 

station move from Qatar to Ft. McPherson. The cardholder did not elect 

split disbursement of his travel reimbursement between himself and 

6 E-8 Ft. Bragg, 

Special 

Operations

4,704 ATM withdrawals in 

hometown area without 

travel order.

Serious delinquency prior to 

travel card issuance.

Verbal counseling.

7 E-4 Ft. Bragg, 

Forces 

Command

8,709 Numerous charges at 

Wal-Mart Supercenter.

Serious delinquency prior to 

travel card issuance.

None.

8 E-3 Ft. Drum, 

Forces 

Command

1,058 Cash from Dream Girls 

Escort Service.

None prior. Serious credit card 

delinquencies in 2002.

None.

9 E-4 Ft. Drum, 

Forces 

Command

10,029 Numerous personal 

charges, including 

casino gambling.

Referral to collection agency 

prior to travel card issuance.

None.

10 E-4 Ft Drum,

Forces 

Command

7,643 Numerous charges at 

local restaurants, gas 

stations, grocery 

stores, and hotels in 

vicinity of Ft. Drum.

Referrals to collection agencies 

prior to travel card issuance.

None.

(Continued From Previous Page)

Cardholder Grade Unit 

Total

charged-off

amount

Transactions 

contributing to 

charge-off Credit history/problems 

Documented 

follow-up/

disciplinary action
Page 31 GAO-03-169 Army Travel Cards

Bank of America when filing travel vouchers. Thus, the entire 

reimbursement for travel expenses was electronically deposited in the 

cardholder’s checking account. The cardholder did not pay his travel 

card bill, but instead used the reimbursement to, among other things, 

pay the closing costs on the purchase of a home. The cardholder was 

counseled by the APC and his supervisors after his travel card account 

became delinquent, but no disciplinary action was taken. The 

cardholder is now in the salary offset program. The cardholder 

informed us that he was briefed, at the time of card issuance, of his 

responsibility to make timely payments to Bank of America in payment 

of expenses claimed on approved travel vouchers. 

• Cardholder #2 was a sergeant first class (E-7) with an Army Reserve 

Officers’ Training Corps unit. Army investigative records showed that in 

January 2001, the cardholder’s spouse used his government travel card 

to make two payments of $2,050 each to Budget Rent-A-Car for the 

purchase of a used automobile. The spouse was able to use the travel 

card because of the general military power of attorney provided to her 

by the sergeant. In addition, several automated teller machine (ATM) 

withdrawals were made using the card at times when the sergeant was 

not on official travel status. The cardholder received a letter of 

reprimand and subsequently retired. In February 2002, after his account 

was charged off, the cardholder’s account was put into the offset 

program and a portion of his annuity automatically withheld for 

repayment to Bank of America. 

• Cardholder #9 was an Army specialist (E-4) at Ft. Drum and received a 

total of three travel card accounts. Shortly after receiving his first card 

he incurred over $5,000 in personal charges, including casino gambling. 

He then notified Bank of America that his wallet, which contained his 

government travel card and driver’s license, had been stolen and that the 

charges on the card were not made by him and therefore were 

fraudulent charges. Bank of America closed this account, charged off 

the amount as a fraud loss, and issued the soldier a second account. The 

soldier then incurred over $8,000 in personal charges for casino 

gambling and notified Bank of America that this card was lost. Bank of 

America again closed this account and issued a third account to the 

soldier. The soldier incurred approximately $5,000 in personal charges 

on this account, including casino gambling. Bank of America personnel 

began to question the soldier regarding the transactions made on both 

the first and second accounts because both accounts showed 

transactions at the same casino and the signatures on the charge 
Page 32 GAO-03-169 Army Travel Cards

receipts were similar to the soldier’s signature. As of April 17, 2002, the 

soldier’s travel card account was in charge-off status, with an unpaid 

balance of $10,029. The soldier told us that he falsified the report to 

Bank of America that his first card was stolen and that the charges were 

fraudulent because he could not pay the bill. He also told us that he 

falsely reported his second card lost again because he could not pay the 

bill. In addition, the soldier stated that he made personal charges on the 

third card, including casino gambling, in hopes of winning enough to pay 

the bill. In October 2000, the soldier received an Article 15 for misuse of 

his travel cards. He received a reduction in grade from an E-4 to an E-1, 

forfeited a half-month’s pay, and was to serve 45 days of extra duty 

beyond his November 30, 2000, discharge date. The soldier informed us 

that the Commander waived the 45 days and he received an honorable 

discharge as an E-4. In February 2002, the Army enrolled this soldier in 

the offset program. The soldier is currently an E-5 with the 

Pennsylvania National Guard. According to the National Guard, the 

Army’ official personnel file for this soldier contains no information 

concerning any adverse action.

• Cardholder #10, another Army specialist (E-4) at Ft. Drum used his 

government travel card to make numerous purchases of personal items 

totaling $2,841 over a 3-month period from May through July 2000. The 

personal items included 38 restaurant charges, 37 charges at gas 

stations, 14 charges at grocery stores, and 5 hotel charges in the vicinity 

of Ft. Drum. The specialist, who had received a $10,000 credit limit on 

his government travel card, had an unpaid balance of $7,643 as of 

December 11, 2000. As of April 17, 2002, the travel card was in chargeoff status and the specialist no longer worked for the Army. Our review 

of the soldier’s credit report showed that he received his government 

travel card from Bank of America in May 1999. Since that time, the 

soldier opened numerous credit card and other consumer accounts with 

other vendors, almost all of which had unpaid balances and were in 

collection status or had been charged off. We found no evidence that 

the APC detected the soldier’s personal use of the government travel 

card. As a result, the Army could not take timely action to cancel or 

suspend the soldier’s travel card account. We also found no evidence 

that disciplinary action was taken to address personal use of the travel 

card or the unpaid debt once the Army became aware of the problem. 

In contrast to the charged-off accounts discussed above, we found some 

instances where the failure to pay the travel card bill was attributable to the 

delays and errors in processing vouchers and reimbursing the travelers. 
Page 33 GAO-03-169 Army Travel Cards

This issue is discussed in more detail in a later section on testing of key 

internal controls. 

Travel Card Abuse Where 

Cardholder Paid Bank of 

America 

We also found instances in which cardholders used their travel cards for 

personal purposes, but paid their travel card bills when they became due. 

These cardholders benefited by, in effect, getting interest-free loans. 

Personal use of the card increases the risk of charge-offs related to abusive 

purchases, which are costly to the government and the taxpayer. In 

addition, the high rate of abuse with respect to travel card activity is 

indicative of the weak internal control environment and the failure of the 

APCs to monitor credit card activities, as discussed later in this report. 

Table 4 provides examples of the types of abusive charges we found during 

our review. 
Page 34 GAO-03-169 Army Travel Cards

Table 4: Examples of Abusive Activity Where the Cardholders Paid the Bill

a

Equivalent to GS-15.

Source: GAO analysis.

As shown in table 4, cardholders used their travel cards for a wide variety 

of personal goods or services, including cruises, sporting and music event 

tickets, membership dues, and personal clothing items. For example, we 

were able to determine that, during fiscal year 2001, approximately $45,000 

was spent Army-wide to purchase cruise packages or to pay for a variety of 

activities or services on cruise ships.

Some individuals who abused their travel card privileges held positions 

where they may have been responsible for taking appropriate disciplinary 

action with respect to travel card abuse by personnel within their 

commands. For example, a Lieutenant Colonel used his travel card to 

Cardholder Unit Grade Vendor Amount Nature of transaction

Documented

disciplinary 

action

1 U.S. Army Europe 

Allied Command 

E-5 Celebrity Cruises $5,192 Reservations for 4 on the 

Millennium cruise ship, which sails 

to the Bahamas and Caribbean.

None.

2 U.S. Army Reserve 

Command 

O-5 Purdue University 

Rose Bowl Tour

3,998 Accommodations for two for 4 

nights during the Rose Bowl. 

Package includes pep rally, New 

Year’s Eve event, and premium 

seats to the parade.

None.

3 U.S. Army Reserve 

Command

O-2 Louisiana 

Superdome

1,395 45 tickets to the Essence Music 

festival on July 5, 2001.

None.

4 Army Corps of 

Engineers

GM-15a Georgetown Prep 

Tennis Club

826 Tennis club membership. None.

5 California National 

Guard

E-4 GEICO 491 Automobile insurance. None.

6 Ft. Bragg, Special 

Operations

E-7 Russell’s For Men 191 Purchases made through a toll-free 

number for “fine gifts for men.”

None.

7 Ft. Bragg, Forces 

Command

E-5 Victoria’s Secret 172 Women’s lingerie. None.

8 Ft. Bragg, Forces 

Command

E-4 1-800-CONTACTS 80 Contacts and contact solutions. None.

9 Ft. Drum,

Forces Command

E-5 Gateway Direct 392 Computer equipment. None.

10 Ft. Drum,

Forces Command

E-6 Sunshine 

Entertainment

275 Personal escort service. None.
Page 35 GAO-03-169 Army Travel Cards

purchase accommodations and tickets to attend the Tournament of Roses 

in Pasadena, California, as shown in example 2 in table 4. 

Abusive Travel Card Use at Adult 

Entertainment Establishments

We also found instances of abusive travel card activity in which Army 

personnel used travel cards to obtain cash at establishments, such as 

“gentlemen’s clubs,” instead of following prescribed ATM procedures. 

Specifically, we found cases in which these clubs provided adult 

entertainment services and helped the cardholders circumvent travel card 

ATM cash withdrawal limits, by supplying cardholders with actual cash or 

“club cash” for a 10 percent fee. We were able to identify about 200 Army 

travel cardholders who during fiscal year 2001 charged almost $38,000 on 

their government travel cards at these establishments. Some of these 

individuals also did not pay their related travel card bills, and their travel 

card accounts were charged off.

DOD’s travel card policy sets limits on the amount of cash a cardholder can 

withdraw using ATMs. Typically, the ATM limit is set at $500 for a standard 

card and $200 for a restricted card, meaning that in any 1-month cycle, 

Army cardholders could only obtain cash up to the limit specified on their 

cards. However, Army cardholders circumvented these policies by 

obtaining cash or club cash at a substantial fee from such clubs.

The gentlemen’s clubs typically sell adult entertainment, many sell alcohol, 

and some sell food. DOD and other federal agencies use merchant 

category codes (MCC)18 to identify and block merchants in certain 

categories from accepting travel cards as payment for goods and services 

at those establishments. However, some merchants with blocked codes 

circumvented this control by using an allowable MCC to submit cash 

transactions at their establishments. For instance, Crazy Horse Too is an 

entertainment establishment that provides topless dancing and sells 

alcohol, but not food. This establishment allows customers to use their 

travel cards to obtain club cash from the bar for a 10 percent fee. Club cash 

can only be used to tip dancers, waitresses, and bartenders, but cannot be 

exchanged for currency and cannot be used to purchase alcohol. Crazy 

Horse Too codes the club cash that it provides to customers as a “bar 

charge” in the name of its operating company, the Power Company. This 

18MCCs are established by the banking industry for commercial and consumer reporting 

purposes. Currently, about 800 category codes are used to identify the nature of merchants’ 

businesses or trades, such as airlines, hotels, ATMs, jewelry stores, casinos, gentlemen’s 

clubs, and theaters.
Page 36 GAO-03-169 Army Travel Cards

coding allows these charges to bypass the MCC blocking control. Other 

clubs, such as Cheetahs Lounge Club, provide actual cash instead of club 

cash, and also code the transactions as “bar charges.” 

For example, one cardholder used his restricted travel card to obtain more 

than $5,000 in cash. As discussed previously, a restricted card has a 

maximum credit limit of $2,500 and an ATM cash withdrawal limit of $200 

per monthly statement cycle. In this instance, the cardholder’s restricted 

travel card was activated about 20 days prior to his official travel. The 

cardholder used the card to make numerous ATM cash withdrawals and 

pay for large restaurant and grocery store charges prior to departure for 

government travel. After arrival at his temporary assignment location, the 

cardholder requested that his APC raise his credit limit from $2,500 to 

$10,000 based on his “mission-critical status.”19 The APC took the requested 

action, without reviewing the cardholder’s account history. The cardholder 

then frequented gentlemen’s clubs near his temporary assignment location, 

where he obtained more than $5,000 in cash. The cardholder told our 

investigators that he sent approximately $2,000 to his spouse, leaving him 

with about $3,000 for personal use and entertainment. The cardholder also 

told us the ability to obtain cash from these clubs was common knowledge 

among military personnel at his temporary assignment location. In this 

case, the APC subsequently discovered the abuse of the travel card and 

took steps that resulted in closing the cardholder’s account, and the 

cardholder received an administrative reprimand for unacceptable 

behavior. 

Few Documented 

Disciplinary Actions Taken 

against Cardholders Who 

Misused the Travel Card 

We found that disciplinary actions were taken against the cardholders in 

less than half of the cases of cardholder abuse that we reviewed. It is 

critical that cardholders who misuse their travel cards are identified and 

held accountable for their actions. Lacking such an environment, the Army 

is likely to continue to experience the types of potentially fraudulent and 

abusive activity identified in our work. The DOD Financial Management 

Regulation (FMR) states that “commanders or supervisors shall not 

tolerate misuse of the DOD travel cards and cardholders who do misuse 

their cards shall be subject to appropriate disciplinary action.” However, 

19Mission-critical status is a determination made by the APC that the cardholder’s credit card 

limit needs to be increased or the delinquency process needs to be suspended because the 

cardholder needs the card to travel, but is unable to obtain reimbursement—and, therefore, 

pay the bill—timely.
Page 37 GAO-03-169 Army Travel Cards

DOD and Army policies and procedures do not define appropriate 

disciplinary action to help ensure that consistent punitive actions are taken 

against cardholders who abuse their travel cards. Available documentation 

indicates that commanders or supervisors did not take any disciplinary 

actions against the majority of individuals who abused or misused their 

cards during fiscal year 2001. We found little documentation 

demonstrating that APCs forwarded cardholder delinquency information to 

appropriate commanders and supervisors to consider in determining 

whether disciplinary actions were warranted.

For the cardholders we inquired about, the primary action taken when 

Army officials identified misuse or abuse of the travel card was to counsel 

cardholders on proper use of the card and responsibility for timely 

payment of travel card bills. In some cases, APCs took actions to cancel 

the cardholder’s travel card account. To the extent that more severe 

disciplinary actions were taken, they were often in response to travel card 

abuse in conjunction with other more serious offenses—such as failing to 

obey orders or drug abuse. In these instances, documented disciplinary 

actions included dismissal from the Army and criminal prosecutions 

resulting in prison sentences. 

At the sites we audited, we were not provided any documentation of 

disciplinary actions taken against cardholders in 65 of 105 charge-off cases 

we reviewed. For example, we found one instance in which a cardholder 

(whose account was charged off for more than $5,000) was not subject to 

any disciplinary action, and was subsequently promoted from Major to 

Lieutenant Colonel. As shown in table 3 (cardholder #5), this individual 

had a history of substantial credit problems, including writing three NSF 

checks. In this instance, records indicated that the cardholder was 

reimbursed for official travel, but did not pay the travel card bill. The 

individual was subsequently placed in the salary offset program.

Also, we found little evidence that cardholders faced adverse 

consequences for personal use of the card as long as they paid the bills 

received from Bank of America. For example, we identified cardholder 

transactions of $5,192 for a Celebrity Cruise Line vacation for four people, 

$2,195 for a stock market investing course, and $1,395 in tickets to a 

musical event. In these instances, the cardholders essentially obtained 

interest-free loans with no adverse consequences. We saw few indications 

that supervisors were aware that these abusive transactions occurred. To 

the extent that we saw documentation that APCs or supervisors were 
Page 38 GAO-03-169 Army Travel Cards

aware of such travel card abuse, we saw little evidence of any disciplinary 

actions. 

Credit Problems Generally 

Not Referred to Security 

Officials

We also found many instances in which there was no evidence that Army 

security officials were informed of travel card charge-offs for consideration 

in reevaluating security clearances. Army regulations provide that an 

individual’s finances are one of the key factors to be considered in whether 

an individual should continue to be entrusted with a secret or top-secret 

clearance. However, we found that Army security officials were unaware 

of travel card debt problems and, consequently, did not consider this 

information in determining whether these individuals should continue to 

receive their security clearances. Our review of the 105 charge-off cases 

discussed previously showed that of 43 cardholders who had secret or topsecret clearances at the time their accounts were charged off, 38 

maintained the same level of clearance as of June 2002. The clearances for 

the remaining 5 cardholders had expired. These financially troubled 

individuals may present security risks to the Army. 

The U.S. Army Central Personnel Security Clearance Facility (commonly 

referred to as Army CAF) is responsible for issuing and updating security 

clearances for Army personnel. Secret clearances are updated every 10 

years and top-secret clearances are updated every 5 years. During the 

interim periods, Army regulations20 require commanders of personnel with 

clearances, such as secret and top secret, to submit to Army CAF any 

evidence of financial irresponsibility on the part of the personnel that 

would affect their clearance. Such evidence would include information on 

financial impropriety by the security clearance holder, such as excessive 

indebtedness. Army CAF is to evaluate this information and determine 

whether to revoke the clearance. 

We found that commanders responsible for referring evidence of financial 

irresponsibility information to Army CAF were, for the most part, unaware 

of their subordinates’ financial problems. We provided the information we 

collected on individuals with charged-off accounts to Army CAF for its 

consideration in determining whether to revoke, change, or renew their 

security clearances.

20U.S. Department of the Army, Regulation 380-67, Security, Personnel Security Program, 

Chapter 8, “Unfavorable Administrative Actions” (Sept. 9, 1988).
Page 39 GAO-03-169 Army Travel Cards

Weak Overall Control 

Environment and 

Ineffective Travel Card 

Program Controls

A weak overall control environment and ineffective internal controls over 

the travel card program contributed to the potentially fraudulent and 

abusive activity related to the travel card and the Army’s high rates of 

delinquency and charge-offs. The foundation of all other controls, a 

positive control environment provides discipline and structure as well as 

the climate that influences the quality of internal controls. Although we 

observed improvements in the first half of fiscal year 2002, we identified 

several factors that contributed to a weak overall control environment for 

fiscal year 2001, including, as discussed previously, few documented 

disciplinary actions taken against cardholders who abuse the card and a 

lack of management attention and focus on establishing and maintaining 

the organizational structure and human capital needed to support an 

effective Army travel card management program. We found that this 

overall weak control environment contributed to design flaws and 

weaknesses in seven management control areas needed for an effective 

travel card program. Specifically, we identified weaknesses in the Army 

travel program controls related to (1) travel card issuance, (2) APCs’ 

capacity to carry out assigned duties, (3) limiting card activation to meet 

travel needs, (4) controls over transferred and “orphan” accounts, 

(5) procedures for terminating accounts when cardholders leave military 

service, (6) segregation of duties to ensure that no one individual can 

control all aspects of a travel transaction, and (7) access controls for Bank 

of America’s travel card database.

All seven of these areas related to two key overall management 

weaknesses: (1) the lack of clear, sufficiently detailed policies and 

procedures and (2) limited travel card audit and program oversight. First, 

the units we audited used DOD’s travel management regulations (DOD

FMR, Volume 9, Chapter 3) as the primary source of policy guidance for 

management of Army’s travel card program. However, in many areas, the 

existing guidance was not sufficiently detailed to provide clear, consistent 

travel management procedures to be followed across all Army units. 

Second, as recognized in the DOD Inspector General’s March 2002 

summary report21 on the DOD travel card program, “[b]ecause of its dollar 

magnitude and mandated use, the DOD travel card program remains an 

area needing continued emphasis, oversight, and improvement. 

Independent internal audits should continue to be an integral component of 

21U.S. Department of Defense Inspector General, Acquisition: Summary of DOD Travel 

Card Program Audit Coverage, D-2002-065 (Washington, D.C.: Mar. 18, 2002).
Page 40 GAO-03-169 Army Travel Cards

management controls.” However, the DOD Inspector General report noted 

that only two internal review reports were issued from fiscal year 1999 

through fiscal year 2001 concerning the Army’s travel card program. These 

reports, issued by the Army’s Assistant Secretary for Financial 

Management (and Comptroller)’s Internal Review Office, covered 

government travel card usage in the Army during fiscal year 2000. In 

addition, each of the Army installations we audited had internal review 

groups that did some level of review of the travel program and identified 

deficiencies in the Army’s travel program at their installations. 

To the extent that oversight reviews were conducted, we saw few 

indications that management took action to address the deficiencies 

auditors identified. For example, the Army’s two fiscal year 2000 internal 

review reports disclosed that existing review procedures were not effective 

in identifying card misuse and identified additional actions needed to 

address travel card abuses, such as unauthorized usage of the card and 

unauthorized cash withdrawals. We identified these same issues in our 

fiscal year 2001 work.

Ineffective Controls over 

Issuance of Travel Cards

The Army’s ability to prevent potentially fraudulent and abusive 

transactions that can eventually lead to additional delinquencies and 

charge-offs is significantly weakened if individuals who had histories of 

financial irresponsibility are permitted to receive travel cards. The Army’s 

practice is to facilitate Bank of America issuing travel cards—with few 

credit restrictions—to all applicants regardless of whether they have 

histories of credit problems. DOD guidance in FMR, Volume 9, Chapter 3, 

provides that all DOD personnel are to use the travel card to pay for official 

business travel. However, the policy also provides that exemptions from 

using the travel card may be granted under a number of circumstances, 

including for personnel who are denied travel cards for financial 

irresponsibility. However, DOD’s policy is not clear as to what level of 

financial irresponsibility by a travel card applicant would constitute a basis 

for such an exemption. In addition, the DOD FMR provides that credit 

checks are to be performed on all travel card applicants, unless an 

applicant declines a credit check. We found no evidence that the Army 

exempted any individuals or groups from required acceptance and use of 

travel cards, even those with histories of previous credit problems. 

In July 1999, Bank of America began obtaining credit checks on DOD travel 

card applicants and used the credit history obtained through these checks 

as a basis for determining the type of account—restricted or standard—it 
Page 41 GAO-03-169 Army Travel Cards

would provide to new DOD travel applicants. An applicant who did not 

authorize a credit check, or with either no credit history or a history of 

credit problems, is issued a restricted travel card with a $2,500 credit limit. 

All other applicants are issued standard travel cards with a $10,000 credit 

limit. DOD policy also permits commanders or supervisors to raise the 

credit limits and ATM limits of restricted travel cardholders to whatever 

level they deem necessary to meet mission requirements, except when the 

cardholder declined a credit check. Our analysis of credit application 

scoring models and credit risk scores used by major credit bureaus 

confirmed that applicants with low credit scores due to histories of late 

payments are poor credit risks. Credit bureau officials told us that if their 

credit rating guidelines for decisions on commercial credit card application 

approvals were used to make decisions on travel card applicants, a 

significant number of low- and midlevel enlisted Army cardholders would 

not have qualified for credit cards even with the restricted limits. A credit 

history showing accounts with collection agency action or charge-offs 

poses an even higher credit risk. Any of these problems can be a reason for 

denying credit in the private sector.

Consequently, until the Army takes action to prevent applicants with past 

credit problems from receiving government travel cards, it will continue to 

unnecessarily increase the risk that individuals will continue a pattern of 

fraud, abuse, and delinquency or nonpayment. Credit industry research 

and the results of our work demonstrate that individuals with previous late 

payments are much more likely to have payment problems in the future. 

As discussed previously, many of the Army travel cardholders that we 

audited who wrote numerous NSF checks, were severely delinquent, or had 

their accounts charged off had histories of delinquencies and charge-offs 

relating to other credit cards; defaulted automobile loans that resulted in 

repossession of the vehicles; defaulted mortgage payments and foreclosure 

proceedings on homes; numerous bankruptcies; and, in several cases, prior 

arrests and convictions for crimes such as writing bad checks.

Unrealistic APC 

Performance Expectations

DOD policy provides that APCs are the primary focal points for day-to-day 

management of the travel program. However, APC duties are generally 

“other duties as assigned.” As discussed in the following sections, the 

sheer number of responsibilities assigned to APCs, coupled with issues 

concerning APC span of control, selection, turnover, training, and 

performance evaluation, result in unrealistic expectations for the 

effectiveness of APCs in carrying out their critical duties. Consequently, 
Page 42 GAO-03-169 Army Travel Cards

we found that APCs were generally ineffective in performing their key 

travel program management oversight duties. 

APC Responsibilities As prescribed by DOD’s FMR guidance, APCs “are responsible for the dayto-day operations of the DOD Travel Card Program.” DOD FMR Volume 9, 

Chapter 3, provides that APCs are responsible for a variety of key duties, 

including establishing and canceling cardholder accounts, tracking 

cardholder transfers and terminations, monitoring and taking appropriate 

actions with respect to any account delinquencies, interacting with the 

bank, and fielding questions about the program from both cardholders and 

supervisors. APCs are also required to monitor delinquent cardholders and 

notify commanders/supervisors of such delinquencies for appropriate 

action. Further, DOD’s FMR also provides that APCs are to receive reports 

from Bank of America showing cardholder transaction activity during the 

most recent billing cycle. However, DOD’s guidance does not further 

specify APC responsibilities for actions based on their review of Bank of 

America reports.

We were told that individuals were given APC responsibilities as a 

collateral duty. APC estimates of the percentage of time spent on their APC 

responsibilities ranged from 2 percent to as high as 80 percent, with most 

indicating they spent about 5 to 20 percent of their time on APC duties. 

Several of the APCs we interviewed indicated that keeping up with their 

APC responsibilities was a challenge because they were expected to 

perform many other duties as well. For example, at the sites we audited, 

civilians with APC responsibilities were often program or budget analysts 

who worked in the installations’ resource management offices.

While some of the military personnel assigned APC responsibilities at the 

sites we audited had primary job responsibilities that were finance related, 

such as budget and resource managers, others had more mission-related 

duties. For example, one of the APCs at the sites we audited was 

responsible for security at an airport, and another was a transportation 

officer. At Ft. Bragg, Special Operations, entire units, along with the APCs, 

were deployed at the time of our audit. Such deployments make it 

increasingly difficult for military personnel assigned APC duties to carry 

out their responsibilities. 

Few of the APCs we interviewed performed any account transaction 

reviews beyond those conducted in conjunction with delinquencies. 

Consequently, instances of abuse of the travel cards were seldom detected 

promptly. Some units’ operating procedures specify that APCs monitor 
Page 43 GAO-03-169 Army Travel Cards

credit card activities to identify misuse. For example, in its operating 

procedures, the California National Guard requires that APCs review credit 

card activity to identify misuse, that such misuse be brought to the 

attention of the commanders/supervisors, and that the 

commanders/supervisors take actions to address the problems. However, 

one California National Guard APC told us that she does not have sufficient 

time available to monitor the travel activity of all the cardholders under her 

purview. Another California National Guard APC told us that, as time 

permits, he monitors the travel card transaction activity of the cardholders 

that are his responsibility on a weekly basis. 

APC Span of Control DOD’s FMR guidance does not address the appropriate span of control for 

an APC—the number of cardholders that an APC should be responsible for 

managing and overseeing. A reasonable span of control is critical for 

effective management and proper travel program oversight. Bank of 

America guidance provides that an optimal span of control is 100 

cardholders per APC. In addition, because APC duties are assigned as 

collateral duties, the span of control should be commensurate with the 

time available to carry out APC responsibilities effectively. As shown in 

table 5, at the four sites we audited, the average ratio of cardholders with 

open accounts to APCs ranged from 65 to 1 to 804 to 1. 

Table 5: Average Ratio of Cardholders to APCs at Army Sites Audited 

Source: GAO analysis of Bank of America data.

Span of control

Ft. Drum,

Forces

Command

California

National

Guard

Ft.Bragg,

Forces

Command

Ft. Bragg,

Special

Operations

Number of cardholders 

with open travel card 

accounts 6,498 4,022 11,424 5,696

Number of APCs 39 5 120 88

Average ratio of 

cardholders to APCs 167:1 804:1 95:1 65:1
Page 44 GAO-03-169 Army Travel Cards

The span of control responsibilities for the APCs at the four sites we 

audited ranged from about 5 open accounts to over 1,000. Decisions on the 

optimal span of control must take into account not only the number of 

accounts for which the APC has direct responsibility, but also the number 

of accounts for which another lower-level APC has direct responsibility, but 

for which the higher-level APC has oversight responsibility.22 For example, 

an APC at the California National Guard site we audited who had direct 

responsibility for managing the travel activities of over 1,000 cardholders 

also had oversight monitoring responsibility for about another 400 

cardholders. An APC at Ft. Bragg, Forces Command, with direct 

responsibility for managing 287 travel card accounts told us that he was in 

the process of working with Bank of America to identify and deactivate the 

cards of any infrequent travelers within his purview. He reported that he 

hoped to reduce the number of accounts he was responsible for to about 

100. 

The sites we audited were consistent in that few of the APCs we 

interviewed performed any account transaction reviews beyond those 

conducted in conjunction with delinquencies. Several of the APCs told us 

that they received detailed account transaction activity reports from Bank 

of America. But, outside of reviews of account activity associated with 

delinquencies, they told us that detailed transaction reviews were too timeconsuming to carry out for their other cardholders. Another APC we talked 

to, who attempted to compare reports on travel card transactions received 

from Bank of America with valid travel orders for the cardholders within 

her purview, said this activity was time-consuming and almost impossible 

to perform for all of the people under her span of control. 

Failure to review available cardholder transaction activity reports available 

from Bank of America and take action to address any inappropriate card 

usage can result in delinquencies and account charge-offs. For example, 

one APC was not aware that a cardholder within his sphere of 

responsibility made multiple personal use transactions, including 

purchases at Wal-Mart, Vitamin World, General Nutrition Center, and 

22APC responsibilities vary depending on the APC’s level in the Army’s organizational 

hierarchy from headquarters down through the Army’s organizational chain of command to 

the individual Army unit level. That is, individuals with APC responsibilities at the Army 

unit level have direct responsibility for monitoring cardholder account activity whereas 

individuals at higher levels in the Army’s organizational hierarchy may have responsibility 

for overseeing the activities of one or more APCs as well as direct responsibility for 

monitoring the account activity of a number of cardholders. 
Page 45 GAO-03-169 Army Travel Cards

Hecht’s, until 3 months after the cardholder’s name appeared in a 

delinquency report in January 2001. By that time, the cardholder owed 

$5,655 and was from 30 to 59 days delinquent. The cardholder’s account 

was eventually charged-off on August 10, 2001, with a balance of $6,997.

APC Selection, Turnover, 

Training, and Performance 

Evaluation

Our internal control standards state that management’s commitment to 

competence and good human capital practices are critical factors in 

establishing and maintaining a strong internal control environment. 

Specifically, our standards provide that management needs to identify 

appropriate knowledge and skills needed for various jobs and provide 

needed training, as well as candid and constructive counseling, and 

performance appraisals. They also state that establishing appropriate 

human capital practices, including hiring, training, evaluating, counseling, 

and disciplining personnel, is another critical environmental factor.

APC selection and turnover. As discussed previously, the DOD FMR 

assigns a number of key duties for government travel card management to 

APCs. However, neither DOD nor the Army had procedures in place that 

addressed the requisite knowledge and skills needed, or the expected 

tenure, for those selected to carry out these key APC responsibilities. We 

found that APC assignments were based on the commanding officer’s 

judgment as to who could best carry out assigned APC duties.

At three of the four sites we audited, the individuals assigned overall APC 

duties for the sites were civilians, and the majority of the individuals 

assigned as subordinate-level APCs were military personnel. We did not 

identify any information indicating that individuals appointed as APCs 

were expected to serve in this role for any specified period. We found that 

civilians appointed as APCs generally served longer terms than military 

APC appointees. For example, at the Ft. Bragg Special Operations site we 

audited, we were told that the civilian APC had served for over 2 years in 

this role, while most of the military APCs turned over roughly every 6 

months. At the Ft. Bragg, Forces Command, site we audited, only 1 of the 

11 APCs we attempted to interview who had been in position during fiscal 

year 2001 remained in that position.

APC training. DOD policy provides that travel card training materials are 

to be distributed throughout the department and that APCs are to be 

informed of policy and procedural changes to the travel card program. 

There are no supporting DOD or Army-wide procedures detailing 

requirements for the extent, timing, and documentation of travel program 

training for APCs. APCs are not required to receive training on the duties 
Page 46 GAO-03-169 Army Travel Cards

of the position or on how to use available Web-based tools and reports from 

Bank of America before they assume their APC duties. 

A number of the APCs we interviewed told us they relied heavily on on-thejob learning and other program coordinators for advice on how to carry out 

their duties when they assumed their APC responsibilities. At the Ft. 

Bragg, Special Operations, site we audited, we were told that the 

command-level APC provided training every 3 months and expected all 

APCs to attend, unless they were deployed or on an assignment that would 

not allow them to attend the training. APCs at Ft. Bragg, Special 

Operations, also told us they received annual or semiannual briefings from 

Bank of America on the electronic tools available in its Web-based system 

containing travel card transaction data—EAGLS (Electronic Account 

Government Ledger System). According to the APCs we interviewed, the 

briefings they received on EAGLS included guidance on how to use the 

system to establish a travel account, how to extract individual cardholder 

delinquency and transaction activity reports, and how to contact Bank of 

America for additional help with the Web-based tools. Some of the APCs 

we talked with reported that they have become proficient in, and routinely 

use, the tools available through EAGLS to assist them in their APC duties 

with respect to delinquency monitoring. Other APCs indicated that they 

either did not use the tools available through EAGLS or were not proficient 

in using them to monitor cardholders’ travel activities. According to data 

provided by Bank of America, about 23 percent of the Army’s APCs have 

never logged into EAGLS. 

APC performance evaluation. Generally, APC responsibilities were 

assigned as an “other duty assignment.” Individuals serving as APCs had, 

and were rated on, other job duties and responsibilities. The extent to 

which the performance of APCs was recognized as a major duty, and rated 

as such, varied. At Ft. Bragg, Special Operations, none of the individuals 

serving as APCs were rated on how well they performed those duties. At 

the Ft. Drum location, one of the APCs had a position description that 

included “serves as travel card program manager” as a major duty (with the 

recognition that this duty, combined with duties as the unit’s program 

manager for cost accounting, should require about 30 percent of the 

employee’s time). 
Page 47 GAO-03-169 Army Travel Cards

Controls over 

Activating/Deactivating 

Travel Cards to Meet Travel 

Needs

Allowing Army travel cardholders to maintain accounts in an active status 

when not needed for government travel unnecessarily exposes the Army to 

an increased risk of misuse—through cardholders either mistakenly or 

intentionally using the card for personal purposes. DOD’s FMR provides 

that restricted cards are issued to cardholders in an “inactive” status and 

initially activated only when the cardholders have authorized government 

travel needs. By contrast, standard cards are “active” when they are issued 

to cardholders. DOD policy guidance does not address deactivating 

restricted and standard travel cards when not needed for official purposes.

Lacking overall policy and procedural guidance in this area, we found 

instances in which individual commands or sites established their own 

practices for deactivating cards when cardholders were not on travel. For 

example, the California National Guard’s August 2001 guidance to all of its

APCs required them to deactivate all travel card accounts for cardholders 

not on official travel. In addition, APCs at Ft. Bragg, Special Operations, 

told us that, as a matter of practice, they deactivate the cards of 

cardholders in military grades of E-5 or below when they are not on official 

travel. 

Accountability for 

Transferred and Orphaned 

Accounts

We also found that the Army lacks clear, sufficiently detailed procedures 

with respect to maintaining effective day-to-day accountability for 

cardholders’ travel card accounts. Until the Army takes action to work 

with Bank of America to clearly establish accountability for accounts that 

are not under the control of a specific APC, it will continue to be vulnerable 

to undetected, potentially fraudulent, or abusive use of these accounts.

In practice, the Army relies on cardholders to inform the transferring 

location’s APC that they will be moving to another Army unit. After a 

cardholder notifies the transferring APC of his or her upcoming move, the 

APC is to inform the cardholder that he or she is required to report to the 

APC at the new location within 10 days of arrival. If the cardholder does 

not check in with the APC at the gaining location at the end of 10 days, the 

losing APC is to deactivate the cardholder’s account. However, transferring 

units’ APCs told us that cardholders do not always inform them of 

upcoming moves and, therefore, they do not deactivate the cards when the 

cardholders fail to report to the new APC within 10 days.

As a result, many accounts fell into “limbo” and are also referred to as 

“orphan accounts.” Accounts for transferred cardholders can remain in 
Page 48 GAO-03-169 Army Travel Cards

this limbo status for lengthy periods. For example, 2 California National 

Guard accounts out of the 166 that we examined for our statistical tests 

belonged to cardholders who had transferred from their units in 1998 and 

2000, respectively. The responsible APC was not aware that the transfers 

had taken place until we brought the matter to her attention. 

According to Army officials, this breakdown in accountability is one of the 

primary causes for the Army’s large number of orphaned accounts.23 These 

are Army travel card accounts that are not under the purview of any APC, 

according to Bank of America records. Bank of America officials also told 

us that some of the accounts in this group might not even be Army 

accounts. As shown in appendix III, Bank of America data show that as of 

the end of fiscal year 2001, orphaned accounts had about a 20 percent 

delinquency rate.

Without an APC assigned to oversee these accounts, orphan accounts pose 

a higher risk of charge-offs. In fiscal year 2001, Bank of America charged 

off 717 accounts of the approximately 7,479 active orphan Army accounts, 

accounting for almost $1 million. In May 2002, Bank of America issued 

letters to all cardholders in the orphan grouping informing them that unless 

they took action to identify accountable APCs, their accounts would be 

closed.

Exit Control Procedures for 

Separating Employees

As with transferred employees, neither DOD nor Army procedures are 

sufficiently detailed to ensure that APCs are notified and take prompt 

action to terminate cardholders’ accounts when cardholders leave the 

Army. DOD’s FMR provides that APCs are responsible for terminating 

travel cards when cardholders are dismissed, retire, or are separated from 

DOD. Operating procedures established by individual Army commands 

and installations to notify APCs in the case of retirement, separation, or 

death of employees were neither consistent nor effective.

In general, we found that APCs relied on cardholders to notify them that 

they were leaving the Army. Some APCs informed us that their units’ exit 

procedures for separated, retired, or dismissed employees require that 

23Bank of America also includes in this grouping accounts inherited from the previous 

government travel card contractor that were not linked to any Army command and accounts 

for which the accountable APC left or was relocated without having a replacement 

designated. 
Page 49 GAO-03-169 Army Travel Cards

individuals turn in their travel cards as part of the exit process before 

leaving the organizations. For example, the National Guard’s standard 

operating procedures provide that “All departing cardholders that are 

terminating their federal employment status will turn in their Travel Charge 

Card to their APC as a part of their out processing.” However, we found 

instances in which these procedures were difficult to implement. For 

example, a California National Guard official told us that this procedure is 

difficult to implement because some guard employees are hundreds of 

miles from the location of their cognizant APC. The official told us that 

many of the separations from the guard are handled through mail, e-mail, 

and fax, and not through face-to-face contact with unit officials or the APC. 

One APC told us that she sometimes becomes aware that cardholders are 

departing when she receives their travel cards through the mail. If an APC 

does not receive messages or paperwork to cancel the cards, or if there is a 

delay in notifying the APC of the cardholders’ departure, the cardholders’ 

accounts would remain active and the separated cardholders may abuse 

the cards. 

Due to the lack of procedures to effectively identify and terminate the 

cards of individuals no longer in the Army, we found the following 

examples of separated or retired individuals who abused the travel card. 

These separated or retired Army employees benefited by using travel cards 

to purchase a variety of goods and services and then not paying their 

monthly bills, essentially obtaining the personal items for no cost and 

possibly receiving discounted government rates by using their government 

travel cards. 

• A service member (E-4) assigned to Ft. Knox was released from active 

duty on September 16, 2000, but his travel card was not deactivated at 

that time as required. In May 2001, over 8 months after he separated, 

charges started appearing on his travel card. Charges included ATM 

withdrawals, restaurant charges, and monthly fees for a fraternal 

organization. In addition, the cardholder spent more than $110 at 

Platinum Plus, an adult entertainment establishment. The cardholder 

continued to use the card through August 2001, almost 1 year after he 

left the service. Although the cardholder charged more than $1,125 on 

the card, he did not submit any payments on his Bank of America bills. 

The account balance was charged off in January 2002. 

• An air reservist (E-6) assigned to military postal service was discharged 

on February 4, 2000, but did not turn in his card. The individual 

continued to use his government-issued travel card for personal use. In 
Page 50 GAO-03-169 Army Travel Cards

fiscal year 2001, the individual made charges totaling approximately 

$5,800 on his travel card, including over $5,000 of cash advances in the 

vicinity of his home in New York. The soldier’s travel card account was 

closed on March 11, 2002, and the unpaid balance of $3,419 was charged 

off.

• A first sergeant (E-8) at Ft. Hood, Texas, repeatedly used his travel card 

after his retirement on September 30, 2000. During fiscal year 2001, he 

used the travel card for personal goods and services totaling more than 

$8,000. The charges consisted of almost $2,000 in car rentals, another 

$2,000 in hotel charges, and approximately $2,951 in restaurant 

charges—including a one-time catering charge of $1,455—primarily in 

Hawaii and Texas. In addition, he spent $1,119 on two cruises with 

Royal Carribean cruise line. Because the Army does not routinely 

monitor cardholders’ transaction reports for abusive activity and 

because this particular account was always paid in full, the abusive 

activities were not detected for more than a year. In February 2002, 

while scanning travel card activities of all cardholders under her sphere 

of responsibility, the APC became aware that the cardholder had retired. 

The APC deactivated the cardholder’s account in March 2002. 

• A sergeant first-class (E-7) retired from the active duty National Guard 

in February 2000, but continued to use the government travel card in 

fiscal year 2001. Subsequent to his retirement, the individual became a 

state guard employee. State employees are not entitled to hold federal 

government travel cards. Bank of America and National Guard records 

indicated that the individual used the government travel card for onbase lodging and rental car charges related to official travel with the 

state guard. As of the time of our audit, more than 2 years after the 

cardholder’s retirement, the cardholder’s account was still open, 

although we noted that the account was not delinquent.

An APC told us that out processing procedures should include APC or 

supervisor verification that the cardholder’s account was closed. In fact, 

her unit has established an informal procedure that has helped ensure that 

APCs receive timely notification of a cardholder’s departure. The 

procedure involves the departing cardholder’s supervisor sending e-mails 

to the cognizant APC notifying him or her of the date the service member is 

leaving and to close the cardholder’s account as of that date. 

We also found that the Army did not have procedures requiring periodic 

comparisons between active travel card accounts and employees to ensure 
Page 51 GAO-03-169 Army Travel Cards

that accounts of separated or retired employees are closed. For example, 

each Army unit we visited maintained records of retired, dismissed, and 

separated employees and the respective dates of these actions. However, 

none of the APCs we interviewed compared these records against the list of 

active accounts to identify accounts that should have been closed but were 

not. Periodic reconciliations of the two lists would have enabled the Army 

to identify employees who had left and should no longer have had travel 

cards.

Segregation of Duties 

Controls Were 

Compromised at One 

Installation

Adequate controls must be in place to ensure that no one individual can 

control all key aspects of a travel transaction. Such controls are key to 

effectively reducing the risk of error or fraud at the four sites we audited. 

Our observations and walk-throughs showed that proper segregation 

occurred because no one individual was responsible for the major 

functions associated with the voucher approval and payment process. 

Specifically, we found the traveler and person approving the travel orders 

were generally located at the installation, whereas a DFAS center prepared 

the final vouchers and entered the data into the DOD travel payment 

system, the Integrated Automated Travel System (IATS). For example, in 

the case of Ft. Drum, located in Watertown, New York, its vouchers were 

processed and paid by the DFAS center in Orlando, Florida. Further, we 

found that no one individual at the DFAS centers was responsible for (1) 

entering payment information into IATS and (2) auditing travel voucher 

summaries for accuracy and completeness.

However, at the California National Guard, we did identify weaknesses that 

compromised segregation of duties controls. Specifically, controls were 

not in place to prevent California National Guard members, who also 

served as voucher examiners, from validating, approving, and auditing their 

own final travel vouchers and submitting them to DFAS for payment. 

In addition, weak controls over the California National Guard’s usernames 

and passwords for “temporary” voucher examiners further increased the 

risk that voucher examiners could prepare, validate, and receive payment 

for erroneous or fraudulent travel vouchers without detection. Temporary 

voucher examiners—those California National Guard members who are 

employed as voucher examiners on a part-time or intermittent basis—were 

given generic usernames and passwords for accessing IATS. However, 

according to the permanent travel voucher examiners we talked to, these 

generic usernames and passwords for temporary voucher examiners were 

well known to the permanent travel voucher examiners as well. 
Page 52 GAO-03-169 Army Travel Cards

Consequently, any of the California National Guard’s permanent travel 

voucher examiners could use one of these well-known generic usernames 

and passwords to access IATS to enter, delete, or modify travel data in the 

system—including data related to their own travel voucher processing and 

payment—without detection. 

Access Controls over Bank 

of America’s Travel Card 

System

Thousands of Bank of America and DOD employees had access to Bank of 

America’s travel card transaction data system, known as EAGLS. 

Computer system access controls are intended to permit authorized users 

to access a system to perform their assigned duties and preclude 

unauthorized persons from gaining access to sensitive information. Access 

to EAGLS is intended to be limited to authorized users to meet their 

information needs and organizational responsibilities. Authorized EAGLS 

user access levels include APC-level (APCs requiring access to travel data 

for cardholders under their purview), individual-level (individual travelers 

requiring access to their own travel transaction histories), and bank 

employee-level access (Bank of America employees may be granted one of 

five different levels of access depending on their assigned duties). The 

highest level of Bank of America employee access to EAGLS is the “super 

user” level. According to Bank of America security officials, this level of 

access—which provides users the ability to add, delete, or modify anything 

in the system, including creating accounts and editing transaction data in 

the system—should be granted to as few individuals as possible.

We found that 1,127 Bank of America employees had some level of access 

to the EAGLS system, including 285 with super user level access. After we 

brought this matter to the attention of Bank of America security officials, 

they reviewed employee access and deactivated access for 655 employees 

that they determined should not have had any level of access. Further, 

Bank of America has since initiated periodic reviews to ensure that it 

maintains appropriate levels of employee access.

In addition, DOD employees retained APC access to EAGLS after 

relinquishing APC duties or after they may have been terminated or 

transferred. In a 2000 survey of 4,952 individuals with APC-level access to 

EAGLS, DOD found that approximately 10 percent could not be located 

and may have been terminated or transferred or no longer had APC 

responsibilities. Over concern that many of these accounts should be 

deactivated, Bank of America has begun a review to determine if DOD 

employees with APC-level access no longer have APC responsibilities or 

have left the service.
Page 53 GAO-03-169 Army Travel Cards

Statistical Tests of Key 

Control Activities 

With the weak control environment and related program control 

weaknesses we identified, it is not surprising that, as shown in table 6, we 

found a significant percentage of failures in several of the key control 

activities we statistically tested at the four Army locations we audited. We 

selected four key control activities to test related to basic travel transaction 

and voucher processing. 

Specifically, we tested the implementation of the following internal control 

activities for a statistically valid sample of travel card transactions.

• Was there a travel order associated with the transaction that was 

approved prior to the start of travel?

• Was there a travel voucher associated with the transaction that was 

properly reviewed to ensure that payment was accurate and properly 

supported?

• Did the traveler submit a travel voucher associated with the transaction 

to the installation travel office for processing within 5 days of 

completion of travel as required by government travel regulations?

• In accordance with TTRA and DOD FMR, was the traveler paid within 30 

days of the date a properly approved travel voucher associated with the 

transaction was submitted for payment? 

Appendix II includes the specific criteria we used to conclude on the 

effectiveness of these controls. 
Page 54 GAO-03-169 Army Travel Cards

Table 6: Results of Testing of Key Internal Controls

Note: The numbers in the table represent point estimate percentages for the number of failures in the 

population based on our sampling tests. The confidence intervals for our sampling estimates are 

presented in app. II.

Source: GAO analysis.

The Army’s inability to establish effective controls in several of these key 

control areas, particularly relating to timeliness of payment, contributed to 

its high delinquency rate. As discussed previously, for the four locations, 

we estimate that the percentage of transactions during fiscal year 2001 that 

represented personal use varied from 15 percent at one location to 45 

percent at another location.24

Controls over Travel Order 

Approval Were Generally 

Effective

Timely approval of the travel orders is the first step in ensuring that travel 

is authorized. At three of the four installations we audited, the controls 

over travel order approval were effective. We estimate that 0 to 3 percent 

of transactions at these installations did not have documented evidence 

that travel orders were approved prior to the beginning of travel. At Fort 

Bragg, Forces Command, travel order controls had an estimated 6 percent 

Percentage of failure

Army unit

Travel orders

are approved

prior to travel

Travel voucher

reimbursements

are accurate

Travel vouchers

are submitted

within 5 days

of travel

completion

Travel

vouchers are

paid within

30 days of

submission

Ft. Drum, Forces 

Command 0.0 10.4 21.9 5.2

Ft. Bragg, 

Special 

Operations 3.1 7.3 30.2 7.3

Ft. Bragg, 

Forces 

Command 6.2 18.8 38.5 8.3

California 

National Guard 1.0 41.9 27.9 60.5

24Our estimates of the percentage of apparent personal use of the travel card at the four sites 

we audited were: Ft. Bragg, Forces Command (45.0 percent); Ft. Drum, Forces Command 

(14.8 percent); Ft. Bragg, Special Operations (18.0 percent); and California Army National 

Guard (29.5 percent). 
Page 55 GAO-03-169 Army Travel Cards

failure rate associated with travel orders that were not approved prior to 

travel. The control breakdown we noted in our sample transactions 

occurred when the travel took place prior to written approval of the travel 

order. For example, one traveler had travel duty from April 8, 2001, to

April 19, 2001, but did not get his travel order approved until April 27, 2001. 

According to Army officials, this often occurred because travelers 

neglected to document the date of verbal travel authorization on their 

written travel orders. 

Controls over Travel 

Voucher Review and 

Accuracy Were Not 

Effective

Once the travel is complete, the traveler is to submit a voucher for all 

reimbursable expenses and must include receipts for certain claimed 

amounts. The voucher review process is intended to ensure that only 

authorized, properly supported travel charges are reimbursed and that the 

amounts are accurate and properly calculated. At the four installations 

audited, we estimate that about 7 percent to 42 percent of transactions 

were associated with travel vouchers that were not accurate or were not 

properly supported. The California National Guard had an estimated 

failure rate for voucher review that was two to six times higher than that of 

the other three installations. We found undetected instances of travel 

voucher errors by travelers, voucher reviewers (both installation-level and 

DFAS-level), and DFAS. 

Travel voucher errors result in either over- or underpayments to the 

traveler and create an additional administrative burden for Army and DFAS 

when the traveler must file a supplemental voucher to claim amounts that 

were not paid initially or when the initial travel vouchers are incomplete or 

erroneous. For example, according to DFAS Orlando officials, during fiscal 

year 2001 DFAS Orlando returned an estimated 12,000 vouchers to Army 

installations because of errors or omissions in the initial voucher packages 

submitted to DFAS. Further, delays in paying valid amounts to travelers 

can result in delinquent accounts when the cardholder has not been fully 

reimbursed by the time the monthly travel card bill is received. In our 

samples, we found that most errors were in the following categories.

• Missing receipts – We found instances in which voucher packages did 

not include all required receipts to support claims based on DOD and 

Army regulations. DFAS paid the vouchered amounts in these cases 

despite the lack of receipts. For example, for a Ft. Drum cardholder, 

DFAS paid hotel charges on a voucher for which the cardholder did not 

attach the required receipt. At the California National Guard, we found 
Page 56 GAO-03-169 Army Travel Cards

that a cardholder was paid for 4 nights of lodging when the receipt was 

for 3 nights.

• Errors in amounts paid – We found instances in which DFAS used an 

incorrect per diem rate25 for lodging and meals and incidental expenses 

to calculate the reimbursement amount, resulting in both over- and 

underpayments to the traveler. We also found that DFAS made errors in 

calculating reimbursements for ATM fees and car mileage. Most of 

these errors were relatively small in terms of dollar amounts. In one 

instance, we found that DFAS underpaid a cardholder about $814. In 

this case, the cardholder, an E-8, master sergeant at Ft. Bragg, Special 

Operations, filed a voucher package with required supporting 

documentation for lodging, transportation, and other expenses totaling 

about $814 incurred while on extended travel. DFAS erroneously 

excluded these expenses from its reimbursement calculation and 

consequently understated the amount paid to the cardholder by this 

amount. While the cardholder paid his bill from Bank of America that 

included these expenses, it was not until we brought this matter to the 

attention of Army and DFAS officials that the cardholder was 

reimbursed. In another instance, we found that an E-5 cardholder at Ft. 

Drum filed a travel voucher with DFAS Orlando claiming and receiving 

reimbursement for taxi fares totaling $48.50. However, according to the 

related travel order, a government vehicle was provided. After we 

brought this matter to its attention, DFAS Orlando obtained a $48.50 

reimbursement from the cardholder. At the California National Guard, 

we found that a cardholder’s per diem reimbursement was less than the 

allowed amount, and the traveler was paid $75 for parking expense 

when the receipt showed $86.

The California National Guard’s procedures for reviewing travel vouchers 

differed from the other locations we audited in that the United States 

Property and Fiscal Office (USPFO)—an organizational component of the 

California National Guard—reviews all travel vouchers submitted by 

California National Guard personnel for validity and accuracy before 

submitting voucher payment requests to DFAS. California National Guard 

officials attributed the high error rate to staff shortages in the voucher 

examination branch and difficulty in retaining high-quality personnel in 

these low-paying positions. 

25Per diem is a daily allowance paid to travelers in lieu of actual subsistence expenses. Per 

diem rates for various geographic areas are published by GSA. 
Page 57 GAO-03-169 Army Travel Cards

For the other Army units we audited, DFAS was responsible for reviewing 

the vouchers for accuracy and proper support prior to payment. We visited 

DFAS Orlando—the DFAS location responsible for processing travel 

vouchers for two of our four test sites. We found that DFAS Orlando made 

some voucher processing errors, which officials at that location attributed, 

at least in part, to the large volume of vouchers processed at that location, 

the number of vacant positions, and the significant amount of overtime 

needed to process vouchers and disburse funds within a 4- to 5-day time 

frame. For example, DFAS Orlando officials reported processing over 

115,000 travel vouchers during fiscal year 2001, averaging approximately 

11,000 vouchers per month, and had six vacancies that they were unable to 

fill. Also, in May 2002, DFAS Orlando reported 912 hours of overtime 

associated with processing 13,422 of the estimated 17,500 travel vouchers 

received during the month. 

Travel Processing 

Timeliness Was a Significant 

Problem Resulting in Late 

Payments to Travelers 

We tested two key areas where prompt action is needed to ensure that 

travelers are reimbursed for valid expenses within required time frames. 

First, DOD policy requires the traveler to submit a travel voucher within 5 

days of return from travel.26 We estimated significant failure rates for this 

requirement at all four installations, ranging from 22 percent to 39 percent 

of fiscal year 2001 transactions. When this control failed in our sample 

transactions, the delay in submitting a travel voucher ranged from 6 days to 

as long as 228 days. Numerous travelers took up to 3 weeks to submit 

vouchers upon return from travel. Installation officials told us that 

travelers on extended travel for deployment to a war zone do not always 

have an opportunity to file interim vouchers. Also, the officials stated that 

many travelers return from travel, only to leave within a day or 2 for annual 

leave or another business trip and, therefore, do not have an opportunity to 

submit their travel vouchers promptly.

Delays in filing travel vouchers cause delays in travel reimbursements, 

which can ultimately result in delinquent accounts. For example in one of 

the sampled Ft. Bragg, Special Operations, transactions, the cardholder 

was on extended travel and did not file an interim voucher. This traveler’s 

account became delinquent, but he paid the balance due after being 

reimbursed. In another instance, a member of the California National 

Guard who completed travel in February 2001 did not complete a travel 

26DOD’s FMR provides that for long-term travel, cardholders are expected to file interim 

vouchers every 30 days. 
Page 58 GAO-03-169 Army Travel Cards

voucher until mid-April 2001. It took another 3 months for the voucher to 

arrive at the USPFO facility responsible for processing it. Although DFAS 

paid the voucher 2 days after receipt of the payment request, the 

cardholder’s account was delinquent for the 3 months.

Second, upon submission of a proper voucher by the employee, DOD has 

30 days in which to make reimbursement without incurring late payment 

fees and charges. Once the approving official receives a properly 

documented travel voucher, the 30-day payment period begins. If payment 

is not made in 30 days, the traveler is owed a late payment fee that is to be 

calculated using, at a minimum, the Prompt Payment Act interest rate, as 

required by TTRA27 and GSA regulations.28 GSA’s regulations also require 

the cardholder to be paid an amount equal to the amount Bank of America 

would have been entitled to charge the cardholder had the cardholder not 

paid the bill by the due date.

Failure rates for this control activity ranged from about 5 percent to 8 

percent for three of the four installations we tested, which we considered 

to be partially effective. Delays in these cases were generally attributed to 

the review process at the installation, while DFAS generally made 

payments within 7 days of receipt of the approved voucher package. 

However, the fourth installation, the California National Guard, had an 

estimated 61 percent of transactions that were associated with vouchers 

that were not paid within the 30-day time frame. Given the delays in initial 

submission of the vouchers, as discussed previously, these additional 

processing delays will result in travelers receiving payment well after they 

receive their monthly travel card bills. Unless travelers use personal funds 

to pay the bills, many accounts will remain delinquent until payment is 

received. For example, we found that one Ft. Drum travel voucher was 

submitted 34 days after travel ended and another Ft. Drum voucher was 

paid 131 days after the travel ended. A California National Guard 

cardholder did not receive payment for a $3,554 voucher until 36 days after 

he submitted his voucher. While the cardholder paid Bank of America the 

full amount due following receipt of his reimbursement, the cardholder’s 

account was initially delinquent because it was not paid within the required 

30-day time frame. 

27Public Law. 105-264, Section 2 (g), 112 Stat. 2352 (Oct. 19, 1998).

2841 C.F.R. Section 301-52.20.
Page 59 GAO-03-169 Army Travel Cards

In another case we reviewed, an individual had planned to retire from the 

Army and subsequently withdrew his retirement paperwork and was 

reassigned to another location. DFAS rejected the employee’s travel 

vouchers for reimbursement of official travel expenses because its records 

showed that he had retired. At the time of our audit, approximately 9 

months had elapsed since the cardholder first sought reimbursement from 

DFAS, and he was still not paid. The individual’s account was seriously 

delinquent, his card was canceled, and he subsequently paid off his account 

out of his own funds—since he had not yet been reimbursed. 

With respect to the California National Guard, in many instances, USPFO 

took more than 30 days from the date of receipt of the travel voucher to 

send a request for voucher payment to DFAS. USPFO officials attributed 

these problems to the lack of qualified voucher examiners. 

Contrary to TTRA and GSA regulations, DFAS did not pay cardholders the 

required late payment fees and charges. According to the DOD FMR, the 

fees and charges are only paid if the traveler claims reimbursement by 

filing a separate voucher claiming the fees and charges. Currently, DFAS 

does not have the systems and data needed to identify and pay applicable 

fees and charges due to travelers who are not reimbursed within 30 days. 

Conclusions The intent of the travel card program was to improve convenience for the 

traveler and to reduce the government’s costs of administering travel. 

However, when the Army implemented the travel card as part of its travel 

program, it did not provide the control infrastructure—primarily human 

capital—necessary to manage and oversee the use of government travel 

cards. Consequently, a weak internal control environment in the travel 

program has resulted in a significant level of delinquencies and charge-offs 

of bad debts, and potentially fraudulent and abusive travel card activity. 

This has resulted in millions of dollars of costs to the Army, including 

higher fees, lost rebates, and substantial time pursuing and attempting to 

collect delinquent travel card accounts.

DOD and the Army have taken positive steps to reduce the delinquencies 

and charge-offs, including establishing a system of wage and retirement 

payment offset for many employees, sending travel reimbursements 

directly to the bank rather than the employee, and making management of 

the travel program a priority for the Army commands. These actions have 

resulted in significant collections of previously charged-off and delinquent 

accounts and improved relations with Bank of America. DOD and the 
Page 60 GAO-03-169 Army Travel Cards

Army have also proposed additional steps as reported in the June 27, 2002, 

DOD Charge Card Task Force report to improve the controls over the travel 

card program. However, these Army and DOD actions have primarily 

addressed the symptoms rather than the underlying causes of the problems 

with the program. Specifically, actions to date have focused on dealing 

with accounts that are seriously delinquent, which are “back-end” or 

detective controls rather than “front-end” or preventive controls. To 

effectively reform the travel program, DOD and the Army will need to work 

to prevent potentially fraudulent and abusive activity and severe credit 

problems with the travel card. Preventive solutions include requiring use 

of the split disbursement payment process by all employees; providing a 

sufficient control infrastructure to effectively manage the program; 

exempting individuals with histories of financial problems from required 

use of travel cards; deactivating cards when employees are not on official 

travel; and providing appropriate, consistent disciplinary action to 

employees who commit fraud or abuse the travel cards. 

Matter for 

Congressional 

Consideration

To reduce DOD’s travel card delinquency and charge-off rates, particularly 

the Army’s, which are higher than those of any other executive branch 

agency, the Congress should consider authorizing the Secretary of Defense 

to require using employees’ travel allowances to pay the travel card issuer 

directly for charges incurred using the travel card. We believe that this 

action would provide DOD the ability to require use of the split 

disbursement payment process for all of its employees.

Recommendations for 

Executive Action

To strengthen the overall control environment and improve internal 

controls for the Army’s travel card program, we recommend that the 

Secretary of the Army take the following actions. We also recommend that 

the Under Secretary of Defense (Comptroller) assess the following 

recommendations and, where applicable, incorporate them into or 

supplement the DOD Charge Card Task Force recommendations to 

improve travel card policies and procedures throughout DOD.

Travel Card Issuance We recommend that the Secretary of the Army establish specific policies 

and procedures governing the issuance of individual travel cards to military 

and civilian employees, including the following:
Page 61 GAO-03-169 Army Travel Cards

• Evaluate the feasibility of extended use of credit checks for all travel 

card applicants.

• For credit check results currently obtained and additional future credit 

checks, use the results to make decisions on travel card applicants. 

Decisions on whether to issue a travel card should consider prior credit 

problems (e.g., bankruptcy; convictions for writing bad checks; and 

defaulted credit cards, home mortgages, and automobile loans). 

• Provide individuals with prior credit problems who are denied travel 

cards with alternative means of travel funding. 

• Provide individuals with no prior credit histories with “restricted” travel 

cards with low credit and ATM limits.

• Develop procedures to periodically evaluate card usage and close 

accounts of infrequent travelers, which will minimize exposure to fraud 

and abuse.

• Cancel accounts for current infrequent travelers as noted in the Charge 

Card Task Force report.

• Evaluate the feasibility of establishing a policy to activate and 

deactivate cards on predetermined start and end dates, which are tied to 

the cardholders’ authorized travel orders. At a minimum, this policy 

should focus on controlling travel card use for the “high-risk” enlisted 

military personnel in the E-1 to E-6 grades.

• Develop comprehensive, consistent Army-wide initial training and 

periodic refresher training for travel cardholders, focused on the 

purpose of the program and appropriate uses of the card. The training 

should emphasize the prohibitions on personal use of the card, including 

gambling, personal travel, and adult entertainment. Such training 

should also address the policies and procedures of the travel order, 

voucher, and payment processes. For entry-level personnel, the training 

should also include information on basic personal financial 

management techniques to help avoid financial problems that could 

affect an individual’s ability to pay his or her travel card bill. 
Page 62 GAO-03-169 Army Travel Cards

Monitoring, Review, and 

Disciplinary Actions

We recommend that the Secretary of the Army establish the following 

specific policies and procedures to strengthen controls and disciplinary 

actions for improper use of the travel card:

• Establish Army guidance on who should be given APC responsibilities 

that considers (1) the knowledge, skills, and abilities required to carry 

out these responsibilities effectively, (2) the time required to carry out 

APC responsibilities on a day-to-day basis effectively, and (3) the length 

of time an individual should be required to stay in the APC position in 

light of time required to become proficient in the use of the tools relied 

on to monitor card usage effectively. Army should evaluate whether the 

APC position should be full-time. 

• To avoid high APC turnover, evaluate the feasibility of maximizing the 

use of civilian rather than military employees to serve in the role of APC.

• Establish guidance on APC span of control responsibilities so that such 

responsibilities are properly aligned with time available to ensure 

effective performance.

• Establish procedures to provide assurance that APCs receive training on 

their APC responsibilities, including how to use EAGLS transaction 

reports and other available data to monitor cardholder use of the travel 

card—for example, reviewing account transactional histories to 

ascertain whether transactions are incurred during periods of 

authorized travel and appear to be appropriate travel expenses and from 

approved MCCs. 

• Train APCs to review EAGLS reports to identify cardholders who have 

written NSF checks for payment of their account balances, and refer the 

employees for disciplinary action. 

• Review, in conjunction with Bank of America, individuals with APClevel access to EAGLS to limit such access to only those with current 

APC duties. 

• Establish Army procedures detailing how APCs should carry out their 

responsibility to monitor card usage for all cardholders assigned to 

them. Included in the procedures should be development of a data 

mining program enabling APCs to scan a large number of transactions, 

and target potentially inappropriate transactions for further review.
Page 63 GAO-03-169 Army Travel Cards

• Establish a requirement for assessing performance of travel monitoring 

and other APC duties as a rating factor on all APCs’ performance 

evaluations. 

• Establish an Army requirement for cognizant APCs to retain records 

documenting any cardholder’s fraudulent or abusive usage of the travel 

card and require this information to be provided to the gaining APC 

when the cardholder is transferred. 

• Establish appropriate, consistent Army-wide policy as a guide for taking 

disciplinary actions with respect to fraudulent and abusive activity and 

delinquency related to the travel card.

• Refer any travel cardholders with secret or higher level security 

clearances for whom financial problems related to the travel card are 

detected to Army CAF for investigation as to whether the individuals 

should continue to be entrusted with secret or higher clearances.

• Assign responsibility and accountability over cardholders transferring 

between Army units or locations, including cardholders currently in 

“orphan” status. Any accounts not assigned to an APC should be 

immediately canceled.

• Strengthen procedures for any employee discharging from service so 

that all cards are obtained from the cardholders, accounts are closed, 

and repayment of any outstanding debts is arranged. 

• Develop procedures to identify active cards of departed cardholders, 

including comparing cardholder and payroll data.

Voucher and Payment 

Processes

We recommend that the Secretary of the Army, in partnership with the 

Director, Defense Finance Accounting Service, revise the travel voucher 

and payment process by developing a process to monitor and track travel 

reimbursements that exceed the 30-day requirement so that individuals not 

paid within the statutory period are paid late fees in accordance with the 

law.

To resolve severe voucher process problems specific to one of the units we 

audited, we recommend that the Commander of the California Army 

National Guard take the following actions:
Page 64 GAO-03-169 Army Travel Cards

• Evaluate travel card procedures from writing travel orders through 

documenting expenses on the voucher and completing the 

reimbursement process with a goal of reengineering these processes to 

provide reasonable assurance that cardholder reimbursement is made 

within the 30-day requirement.

• Strengthen segregation of duties controls so that voucher examiners 

cannot prepare, validate, and receive payment for erroneous or 

fraudulent travel vouchers without detection. Improved controls should 

include eliminating the use of generic usernames and passwords for 

accessing the travel system. 

Agency Comments and 

Our Evaluation

In written comments on a draft of this report, which are reprinted in 

appendix V, DOD concurred or partially concurred with all of our 

recommendations. DOD partially concurred with our recommendations 

regarding (1) training APCs to refer cardholders who write NSF checks for 

disciplinary actions, (2) establishing an Army-wide disciplinary action 

policy for abusive travel card activity, and (3) developing a process to 

identify travel reimbursements that exceed the 30-day requirement so that 

individuals not paid within the statutory period are paid late fees in 

accordance with the law. 

Concerning our recommendation that APCs should be trained to refer 

cardholders who write NSF checks for disciplinary action, DOD responded 

that commanders of military members, not APCs, determine the 

appropriate action when a cardholder has written an NSF check, and not 

every case should be a referral for disciplinary action. DOD also stated the 

Army intends to publish guidance that will require the APCs to notify 

supervisors/commanders of incidents of abuse, misuse, delinquency, and 

other events, including NSF checks. This response appears to address the 

intent of our recommendation. We agree that APCs should be trained to 

identify NSF checks and to report cardholders who write NSF checks to 

the appropriate level of command for review and possible further action. 

The supervisors and commanders would still maintain their discretion to 

select the specific disciplinary action, if any, depending on the 

circumstances of individual cases.

Regarding establishing Army-wide disciplinary action policy for abusive 

travel card activity, DOD stated that the Army already has a strong policy in 

place against theft, fraud, and other intentionally dishonest conduct on the 

part of civilian employees and that it would be inconsistent with current 
Page 65 GAO-03-169 Army Travel Cards

law for the Army to establish further mandatory requirements that impose 

specific disciplinary actions. With regard to military personnel, DOD stated 

that disciplinary actions are addressed as a matter of command discretion. 

We never contemplated that the policy would prescribe mandatory actions. 

Rather, we intended the policy to be a guide of possible disciplinary actions 

to be taken against cardholders. This guidance would also serve as an 

important internal control feature that clearly identifies the consequences 

associated with improper and abusive travel card use and would serve as a 

deterrent to such abuse. Further, the policy could include a range of 

actions that would be appropriate for various types of travel card misuse. 

To eliminate any confusion concerning the intent of our recommendation, 

we made a slight modification to the text of the recommendation.

We also recommended developing a system to identify travel 

reimbursements that exceed the 30-day requirement so that individuals not 

paid within the statutory period are paid late fees in accordance with the 

law. DOD agreed that the current systems for processing and computing 

travel vouchers for the Army do not provide for automated means of 

calculating interest due on vouchers exceeding the 30 days from the proper 

submission date. DOD also stated that the Defense Travel System (DTS) 

currently being deployed automates the voucher submission process and 

should reduce the instances where reimbursements extend beyond 30 

days. However, the DOD Office of Inspector General concluded in a recent 

report29 that DTS remains at high risk of not being an effective solution in 

streamlining the DOD travel management process and that it is not 

expected to be deployed until fiscal year 2006. This system has been under 

development since 1998 with substantial schedule delays and cost overruns 

as well as reductions in functionality. Based on this evaluation, we do not 

consider DTS to be a timely or viable solution for identifying those 

reimbursements outside of the 30-day requirement. TTRA and GSA 

regulations require that late fees be paid to those persons reimbursed 

outside of the 30-day requirement. TTRA imposes a duty on agencies to 

pay the late fees and does not condition the payment of late fees on 

travelers identifying late reimbursements and submitting claims for the 

fees. Until DTS is fully implemented and operational, we continue to 

believe that DOD needs to develop an interim process to identify late 

29Department of Defense Office of the Inspector General, Acquistion: Allegations to the 

Defense Hotline on the Management of the Defense Travel System, Report No. D-2002-124 

(Washington, D.C.: July 1, 2002).
Page 66 GAO-03-169 Army Travel Cards

reimbursements and pay cardholders the appropriate fees in accordance 

with the law.

In addition, in one area, although DOD concurred with our 

recommendation, we do not believe that its response indicates full 

agreement or understanding of the intent of the recommendation. 

Specifically, with regard to our recommendation that credit check results 

be used to make decisions on travel card applicants, DOD responded that 

those with prior credit problems are issued restricted cards and that 

mandatory use of the government travel card is required by TTRA. This is 

not correct. Both the DOD FMR and TTRA provide for exemptions from 

the mandatory use requirements under certain conditions, including 

evidence of financial irresponsibility. When an exemption is granted from 

the mandatory use of the travel charge card, the use of personal funds, 

including cash or personal charge card; travel advances; or Government 

Travel Requests may be authorized for payment of travel expenses. We 

continue to believe that until the Army takes action to consider past credit 

problems in determining whether to authorize issuing government travel 

cards, it will continue to increase the risk that individuals will repeat a 

pattern of fraud, abuse, and delinquency or nonpayment. Our report 

includes numerous examples of such individuals, including those who were 

issued restricted cards.

Finally, in concurring with our recommendations regarding the lack of 

segregation of duties and other voucher processing problems at the 

California Army National Guard, DOD indicated that it had a number of 

detective and compensating controls in place. While these appear 

responsive to our recommendations, we have not evaluated the 

effectiveness of their implementation and therefore cannot determine 

whether these measures will resolve the problems we identified.

As agreed with your offices, unless you announce the contents of this 

report earlier, we will not distribute it until 30 days from its date. At that 

time, we will send copies to interested congressional committees; the 

Secretary of Defense; the Under Secretary of Defense for Acquisition, 

Technology, and Logistics; the Under Secretary of Defense (Comptroller); 

the Secretary of the Army; the Director of the Defense Finance and 

Accounting Service; the U.S. Property and Fiscal Officer, California Army 

National Guard; and the Director of the Office of Management and Budget. 

We will make copies available to others upon request. In addition, the 
Page 67 GAO-03-169 Army Travel Cards

report will be available at no charge on the GAO Web site at 

http://www.gao.gov.

Please contact Gregory D. Kutz at (202) 512-9095 or kutzg@gao.gov, or 

John J. Ryan at (202) 512-9587 or ryanj@gao.gov if you or your staffs have 

any questions concerning this report.

Gregory D. Kutz

Director

Financial Management and Assurance

Robert J. Cramer

Managing Director

Office of Special Investigations
Page 68 GAO-03-169 Army Travel Cards

Appendix I

Background AAppenednxidexiIs

In 1983, the General Services Administration (GSA) awarded a 

governmentwide master contract with a private company to provide 

government-sponsored, contractor-issued travel cards to federal 

employees to be used to pay for costs incurred on official business travel. 

The intent of the travel card program was to provide increased 

convenience to the traveler and to reduce the government’s cost of travel 

by reducing the need for cash advances to the traveler and the 

administrative workload associated with processing and reconciling travel 

advances. The travel card program includes both individually billed 

accounts—accounts held and paid by individual cardholders—and 

centrally billed accounts that are used to purchase transportation or for the 

travel expenses of a unit and are paid directly by the government. As of the 

end of fiscal year 2001, over 2.1 million individually billed travel cards were 

issued to federal government travelers. These travel cardholders charged 

$3.6 billion during the fiscal year. 

Under the current GSA master contract, the Department of Defense (DOD) 

entered into a tailored task order with Bank of America30 to provide travel 

card services to DOD and the military services, including the Army. Table 7 

provides the number of individually billed travel cards outstanding and 

related dollar amount of travel card charges by DOD and its components in 

relation to the total federal government.

30DOD contracted with NationsBank of Delaware, N.A., which subsequently merged into the 

Bank of America, N.A., under a Tailored Task Order under the GSA Master Contract Award 

for the travel card program. The period of performance under the task order was

November 30, 1998, through November 29, 2000, with three 1-year options to renew. The 

task order also allowed for five additional 1-year options under the GSA master contract 

renewal provisions.
Appendix I

Background

Page 69 GAO-03-169 Army Travel Cards

Table 7: Comparison of Number of Individually Billed Travel Cardholders and 

Related Charges for DOD Versus Total Federal Government for Fiscal Year 2001 

Source: Bank of America.

As shown in table 7, DOD accounts for about 1.4 million, or 66 percent, of 

the total number of the individually billed travel cards issued by the entire 

federal government, and DOD’s cardholders charged about $2.1 billion, or 

about 59 percent, of the federal government’s travel card charges during 

fiscal year 2001. Table 7 also shows that the Army provided 432,460 

individually billed cards to its civilian and military employees as of 

September 2001. These cardholders charged an estimated $619 million to 

their travel cards during fiscal year 2001.

Entity

Number of individually

billed travel cardholders

as of September 30, 2001

Fiscal year 2001

individually billed travel

card charges

(dollars in millions)

Army 432,460 $619

Navy (includes Marine 

Corps) 394,952 510

Air Force 501,306 831

Other DOD 86,922 174

Total DOD 1,415,640 $2,134

Total federal government 2,132,031 $3,634

DOD percentage of total 

government 66% 59%
Appendix I

Background

Page 70 GAO-03-169 Army Travel Cards

Travel Card Program 

Guidelines 

The Travel and Transportation Reform Act of 1998 (Public Law 105-264) 

expanded the use of government travel cards by mandating the use of cards 

for all official travel unless specifically exempted. The act is intended to 

reduce the overall cost of travel to the federal government through reduced 

administrative costs and by taking advantage of rebates from the travel 

card contractor based on the volume of transactions incurred using the 

card and on cardholders paying their monthly travel card bills on time. To 

help cardholders pay their monthly bills on time, the act also requires that 

agencies reimburse cardholders for proper travel claims within 30 days of 

submission of approved travel vouchers by the cardholders.31 Further, the 

act allows, but does not require, agencies to offset a cardholder’s pay for 

amounts the cardholder owes to the travel card contractor as a result of 

travel card delinquencies not disputed by the cardholder. The act calls for 

GSA to issue regulations incorporating the requirements of the act.

GSA incorporated the act’s requirements into the Federal Travel 

Regulation. The Federal Travel Regulation governs travel and 

transportation and relocation allowances for all federal government 

employees, including overall policies and procedures governing the use of 

government travel cards. Agencies are required to follow the requirements 

of GSA’s Federal Travel Regulation, but can augment these with their own 

implementing regulations.

DOD issued its Financial Management Regulations (FMR), Volume 9, 

Chapter 3, Travel Policies and Procedures, which supplements GSA’s travel 

regulations. DOD’s Joint Travel Regulations, Volume 1 (for Uniformed 

Service Members) and Volume 2 (for Civilian Personnel), refer to the FMR 

as the controlling regulation for DOD’s travel cards. Further, the Army 

provided informational pamphlets intended to assist its travelers: Pamphlet 

55-16, Transportation and Travel: Civilian Travel and Transportation 

Permanent Change of Station Travel; Pamphlet 55-20, Temporary Duty 

31The act also requires agencies to pay cardholders a late payment fee if they do not 

reimburse cardholders within the 30-day period allowed. Specifically, Federal Travel 

Regulations prescribed by the Administrator of General Services require agencies to either 

(1) calculate late payment fees using the prevailing Prompt Payment Interest Rate beginning 

the 31st day after submission of a proper travel claim and ending on the date on which 

payment is made or (2) reimburse the traveler a flat fee of not less than the prompt pay 

amount, based on an agencywide average of travel claim payments. In addition to the fee 

required in the items above, the agency must also pay the traveler an amount equivalent to 

any late payment charge that the card contractor would have been able to charge the 

traveler had the traveler not paid the bill. 41 C.F.R. Section 301-52.20. 
Appendix I

Background

Page 71 GAO-03-169 Army Travel Cards

Travel: Uniformed Services Personnel Travel and Transportation; and 

Pamphlet 55-22, Civilian Travel and Transportation: Temporary Duty 

Travel. In addition, some of the Army’s individual commands and units 

have issued their own instructions supplementing GSA and DOD 

guidelines.

The Army Travel 

Process

As shown in figure 5, the Army’s travel card management program for 

individually billed travel card accounts encompasses card issuance, travel 

authorization, cardholders charging goods and services on their travel 

cards, travel voucher processing and payment, and managing travel card 

usage and delinquencies. 
Appendix I

Background

Page 72 GAO-03-169 Army Travel Cards

Figure 5: The Army Travel Process

B of A

issues travel card

Official government

travel authorized

(travel order)

Traveler charges

goods and services

on travel card

Merchant

(e.g., rental car co.)

provides goods/services

and charges travel card

B of A processes

card charges, 

pays merchant

bank, and bills 

traveler

B of A credit card

data in EAGLS

APC monitors 

card usage and 

delinquenciesa

by accessing 

EAGLS

APC terminates or

suspends card

for traveler leaving

Army or moving

Merchant bank

accepts transaction 

deposit slips and 

transfers payment

Traveler prepares

voucher and provides

to supervisor for

review with submission

to DFAS

DFAS processes

and paysb voucher

APC processes travel card 

application approved by

supervisor and controls 

credit limits

Traveler requests travel card

Payment

Payment

Payment

Billing

information

Billing

Traveler leaves

service or moves
Appendix I

Background

Page 73 GAO-03-169 Army Travel Cards

a

See figure 7 for specific actions to be taken by the agency program coordinator (APC).

b

The Defense Finance and Accounting Service (DFAS) allows travelers to direct a portion or all 

proceeds from the reimbursement of travel vouchers to Bank of America. Army National Guard units 

process travel vouchers at the units and then send electronic files to DFAS authorizing payment.

Travel Card Issuance and 

Termination

When an Army civilian or military employee or the employee’s supervisor 

determines that he or she will need a travel card, the employee contacts the 

unit’s travel card agency program coordinator (APC) to complete an 

individually billed card account application form. As shown in figure 6, the 

application requires the applicant to provide pertinent information, 

including full name and Social Security number, and identify whether he or 

she is an active, reserve, or guard military member or a civilian employee of 

the Army. The applicant is also required to initial a statement on the 

application acknowledging that he or she has read and understands the 

terms of the travel card agreement and agrees to be bound by these terms, 

including a provision acknowledging that the card will be used only for 

official travel. The APC is required to complete the portion of the 

member’s application concerning who will be responsible for managing the 

use and delinquencies related to the card. Bank of America is required to 

issue travel cards to all applicants for whom it receives completed 

applications signed by the applicants, the applicants’ supervisors, and the 

APCs.
Appendix I

Background

Page 74 GAO-03-169 Army Travel Cards

Figure 6: Travel Card Application

Bank of America issues travel cards with either a standard or restricted 

credit limit. If an employee has little or no credit history or poor credit 

Form: S02D0400/OC R 24000 Revised: 05/29/01

PART 1: TO BE COMPLETED BY EMPLOYEE (Optional fields are italicized and noted by an asterisk) PLEASE TYPE OR PRINT ALL INFORMATION 

Cardholder name as it should appear on the card (First Name , Middle Name or Middle Initial and Last Name):

Social Security Number: Employment Status: 

— — Active Reserve Guard Civilian 

Military Rank and Pay Grade/Civilian Pay Grade (example: E-05, O-03, GS-09, WG-07, etc.): 

Military Rank: Military Pay Grade: – Civilian Pay Grade: – 

Commercial Office Phone: Home Phone: 

Statement Mailing Address: (Indicate Street or P.O. Box) Card Mailing Address*: (if different from statement address)

City or APO/FPO: State: City or APO/FPO*: State*: 

Zip/Postal Code: Country: Zip/Postal Code*: Country*: 

E-mail Address*:

Card Delivery*: The card will arrive approximately 10 to 14 business days after Bank of America receives the application. Expedited card delivery is available, 

however, the applicant will be charged $20. Is expedited card delivery needed? Yes No . 

Signature and Agreement: After reading the attached Agreement between Department of Defense Employee and Bank of America, N.A. (USA) 

(“Agreement”): 1. Initial either A or B below; 2. Sign; 3. Obtain your supervisor’s approval; and 4. Forward the completed form to your APC.

 A. ____ By signing below, I acknowledge that I have read and 

understand, and agree to be bound by, the terms and conditions of 

the Agreement including Bank of America’s right to obtain credit 

reports as described in the Agreement. I attest to the best of my 

knowledge, that the information I have provided herein is true and 

correct. 

B. ____ By signing below, I acknowledge that I have read and understand, and 

agree to be bound by, the terms and conditions of the Agreement; however, I do 

not authorize Bank of America to obtain credit reports and therefore I will not be 

eligible for a standard account. I attest to the best of my knowledge, that the 

information I have provided herein is true and correct. 

This application is for a Government Card Account, which may be standard or restricted, as described in the attached Agreement. I expressly 

agree to accept whichever type of account is established.

Applicant’s Signature: Date: 

Supervisor’s Approval Signature: Date: 

PART 2: TO BE COMPLETED BY AGENCY PROGRAM COORDINATOR (APC) PLEASE TYPE OR PRINT ALL INFORMATION 

(Optional fields are italicized and noted by an asterisk)

Central Account No. 4 4 8 6 — 1 2 — — 

Account Hierarchy: Specify the complete Hierarchy Level (HL) number that pertains to your organization. For example, 0000001 2000005 3012345.

HL1 HL2 HL3 HL4 HL5 HL6 HL7 HL8 

0000001 

Organization/Unit Name: 

FIPS Code: Is the applicant eligible to obtain Contract City Pair airline fares?* +If eligible, participation is*: 

 Yes+ No Mandatory Non-mandatory 

Account Type*: (Check one. If the applicant initialed B in the above Signature and Agreement section, then only a restricted card may be issued. For a restricted card, if no 

activation/deactivation dates are provided below, the card will issued in a deactivated status and can only be activated by the APC.)

Standard Restricted If Restricted, Date to Activate: Month Day Year 

 Date to Deactivate: Month Day Year 

Card Design Type*: Cash Access* : Authorized to Receive Travelers Checks*: 

Standard Quasi-Generic Yes No Yes No 

By signing below, I hereby authorize, on behalf of the Agency/Organization indicated above, that a Government Card be issued to the employee named above. PLEASE RETAIN COPY

FOR YOUR RECORDS. Return copy to: Bank of America, Attn: GCSU, P.O. Box 52304, Phoenix, AZ, 85072-9419, Facsimile: 1.877.217.1033 or 1.888.698.5631

APC: Date: 

 

Name & Title/Rank (Please print) Signature 

Address Line 1: City: State: 

Address Line 2*: Zip Code: Country: 

Address Line 3*: Commercial Telephone: 

Individually Billed Card Account Setup/Application Form

(Department of Defense Travel Card Program) 
Appendix I

Background

Page 75 GAO-03-169 Army Travel Cards

based on a credit check performed by Bank of America, Bank of America 

will suggest to the service that the applicant receive a restricted card with a 

credit limit of $2,500 instead of the standard card with a credit limit of 

$10,000. However, as shown in figure 6, the application allows the 

employee to withhold permission for Bank of America to obtain a credit 

report. If this option is selected, Bank of America automatically issues a 

restricted card to the applicant. 

When cardholders leave the Army, they are required to contact their APCs 

and notify them of their planned departure. Based on this notification from 

cardholders, the APCs are to terminate the cardholders’ accounts. 

Travel Authorization When a cardholder is required to travel for official government purposes, 

he or she is issued a travel order authorizing travel. The travel order is 

required to specify the timing and purpose of the travel authorized. For 

example, the travel order is to authorize the mode of transportation, the 

duration and points of the travel, and the amount of per diem and any cash 

advances. Further, the Army can limit the amount of authorized 

reimbursement to military members based on the availability of lodging 

and dining facilities at military installations.

Using the Travel Card for Official 

Travel Expenses

For authorized travel, travelers must use their cards to pay for allowable 

expenses, such as hotels and rental cars. The Army generally uses a 

centrally billed transportation account to pay for air and rail 

transportation. Also, some units utilize unit cards, a form of centrally billed 

account, in lieu of individually billed travel charge cards for meals and 

lodging for group trips.

When the travel card is submitted to a merchant, the merchant will process 

the charge through its banking institution, which in turn charges Bank of 

America. At the end of each banking cycle (once each month) Bank of 

America prepares a billing statement that is mailed to the cardholder for 

the amounts charged to the card. The statement also reflects all payments 

and credits made to the cardholder’s account. Bank of America requires 

that the cardholder make payment on the account in full within 25-30 days 

of the statement closing date. If the cardholder does not pay his or her 

monthly billing statement in full, and does not dispute the charges within 

60 days of the statement closing date, the account is considered delinquent.

Travel Voucher Submission and 

Processing

Within 5 working days of return from travel, the cardholder is required to 

submit a travel voucher claiming legitimate and allowable expenses 
Appendix I

Background

Page 76 GAO-03-169 Army Travel Cards

incurred while on travel. Further, the standard is for the cardholder to 

submit an interim voucher every 30 days for extended travel of more than 

45 days. The amount that cardholders are reimbursed for their meals and 

incidental expenses and hotels is limited by geographical rates established 

by GSA. 

Upon submission of a proper voucher by the cardholder, the Army has 30 

days in which to make reimbursement without incurring late payment fees. 

Cardholders are required to submit their travel vouchers to their 

supervisors or other designated approving officials who must review the 

vouchers and approve them for payment. If a supervisor’s review finds an 

omission or error in a voucher or its required supporting documentation, 

the approving official must inform the traveler of the error or omission. If 

the payment of the approved voucher takes longer than 30 days, the Army 

is required to pay the cardholder a late payment fee plus an amount equal 

to the amount Bank of America would have been entitled to charge the 

cardholder had the cardholder not paid the bill by the due date.

For all Army units other than those in the Army National Guard, after the 

supervisor approves a cardholder’s travel voucher package for payment, it 

is sent to a DFAS location for processing and payment. In the Army 

National Guard, guard units process, review, and approve all vouchers at 

that level before they are sent to DFAS for payment. DFAS (or the guard 

unit) enters travel information from the approved voucher into DOD’s 

Integrated Automated Travel System (IATS). IATS calculates the amount of 

per diem authorized in the travel order and voucher and the amount of 

mileage, if any, claimed by the cardholder. In addition, any other expenses 

claimed and approved are entered into IATS. Once the travel information 

from the voucher has been entered into IATS, the voucher may be selected 

for further review or audit. DFAS travel services supervisors audit 2 

percent of vouchers under $2,500 and all vouchers $2,500 and greater. In 

addition, vouchers for amounts $20,000 and over are audited again by DFAS 

Indianapolis travel services technicians before payment is disbursed. If 

problems with a voucher are found during the initial entry of the 

information into IATS or during the audit of the information, the 

transaction can be rejected and returned to the cardholder for correction. 

Once the item is successfully processed through IATS, DFAS makes 

payment to the cardholder or to Bank of America and the cardholder, if the 

cardholder elected the split disbursement option whereby part of the 

reimbursement is sent to Bank of America.
Appendix I

Background

Page 77 GAO-03-169 Army Travel Cards

Monitoring Travel Card 

Transaction Activity

In addition to controlling the issuance and credit limits related to the travel 

card, APCs are also responsible for monitoring the use of and 

delinquencies related to travel card accounts for which they have been 

assigned management responsibility. Bank of America’s Web-based 

Electronic Account Government Ledger System (EAGLS) provides on-line 

tools that are intended to assist APCs in monitoring travel card activity and 

related delinquencies. Specifically, APCs can access EAGLS to monitor 

and extract reports on their cardholders’ travel card transaction activity 

and related payment histories.

Managing Delinquent Cardholder 

Accounts

Both the Army and Bank of America have a role in managing travel card 

delinquencies under GSA’s master contract. While APCs are responsible 

for monitoring cardholders’ accounts and for working with cardholders’ 

supervisors to address any travel card payment delinquencies, Bank of 

America is required to use EAGLS to notify the designated APCs if any of 

their cardholders’ accounts are in danger of suspension or cancellation. 

When Bank of America has not received a required payment on any travel 

cardholder’s account within 60 days of the billing statement closing date, 

the account is considered delinquent. As summarized in figure 7, there are 

specific actions required by both the Army and Bank of America based on 

the number of days a cardholder’s account is past due.
Appendix I

Background

Page 78 GAO-03-169 Army Travel Cards

Figure 7: Required Army and Bank of America Delinquency Process Management 

Actions

Note: Starting in fiscal year 2002, DOD began to offset the salary of certain civilian employees, military 

members, and retired military members from all services, including the Army, for the amounts 

delinquent or charged off on travel card accounts.

Source: GAO analysis.

The following is a more detailed explanation of the required actions by 

Army and/or Bank of America with respect to delinquent travel card 

accounts. 

Mails a pre-charge off letter to the cardholder.

DOD actions Bank of America actions

Sends statement to cardholder.

Sends a delinquency reminder to cardholder.

Sends a pre-suspension letter to the cardholder.

Suspends the account prohibiting purchases.

Mails suspension letter to cardholder.

Assesses late fee every 30 days.

Sends 90-day letter to cardholder

Sends letter to cardholder of intent

to initiate salary offset.

Sends a pre-cancellation letter to the cardholder.

Requests DFAS to offset salary.

Closes account, mails notice of cancellation letter

to cardholder.

Charges off account.

APC issues 60-day delinquency notification

memorandum to the cardholder and 

immediate supervisor. Supervisor investigates

and takes appropriate disciplinary action.

APC issues 90-day delinquency notification

memorandum to the cardholder, immediate 

supervisor, and the Company Commander 

who investigates and takes appropriate 

disciplinary action.

APC issues a 120-day delinquency

notification memorandum to the Commander.

The Commander investigates and takes

appropriate disciplinary action.

DFAS offsets salary.

Statement

date

30 days

45 days

55 days

60 days

75 days

90 days

120 days

126 days

150 days

180 days

210 days
Appendix I

Background

Page 79 GAO-03-169 Army Travel Cards

• 45 days past due—Bank of America is to send a letter to the cardholder 

requesting payment. Bank of America has the option to call the 

cardholder with a reminder that payment is past due and to advise the 

cardholder that the account will be suspended if it becomes 60 days past 

due.

• 55 days past due—Bank of America is to send the cardholder a presuspension letter warning that Bank of America will suspend the 

account if it is not paid. If Bank of America suspends an account, the 

card cannot be used until the account is paid.

• 60 days past due—The APC is to issue a 60-day delinquency notification 

memorandum to the cardholder and to the cardholder’s immediate 

supervisor informing them that the cardholder’s account has been 

suspended by Bank of America due to nonpayment. The next day, a 

suspension letter is to be sent by Bank of America to the cardholder 

providing notice that the card has been suspended until payment is 

received.

• 75 days past due—Bank of America is to assess the account a late fee. 

The late fee charged by Bank of America was $20 through August 9, 

2001. Effective August 10, 2001, Bank of America increased the late fee 

to $29 under the terms of the contract modification between Bank of 

America and DOD. Bank of America is allowed to assess an additional 

late fee every 30 days until the account is made current or charged off.

• 90 days past due—The APC is to issue a 90-day delinquency notification 

memorandum to the cardholder, the cardholder’s immediate supervisor, 

and the company commander (or unit director). The company 

commander is to initiate an investigation into the delinquency and take 

appropriate action, at his or her discretion. At the same time, Bank of 

America is to send a “due process letter” to the cardholder providing 

notice that the account will be canceled if payment is not received 

within 30 days unless he or she enters into a payment plan, disputes 

charge(s) in question, or declares bankruptcy.

• 120 days past due—The APC is to issue a 120-day delinquency 

notification memorandum to the cardholder’s commanding officer. At 

the same time, Bank of America is to send a pre-cancellation letter to the 

cardholder. At 126 days past due, the account is to be canceled by Bank 

of America. Beginning in October 2001, once accounts were 120 days 
Appendix I

Background

Page 80 GAO-03-169 Army Travel Cards

past due, Bank of America began sending files to DFAS listing these 

accounts for salary offset. 

• 180 days past due—Bank of America is to send a “pre-charge off” or last 

call letter to the cardholder informing him or her that Bank of America 

will charge off the account and report the cardholder to a credit bureau 

if payment is not received. A credit bureau is a service that reports the 

credit history of an individual. Banks and other businesses assess the 

credit-worthiness of an individual using credit bureau reports.

• 210 days past due—Bank of America is to charge off the delinquent 

account and, if the balance is $50 or greater, report it to a credit bureau.

Some accounts are pursued for collection by Bank of America’s recovery 

department, others are sent to attorneys or collection agencies for 

recovery. The delinquency management process can be suspended when a 

cardholder’s APC informs Bank of America that the cardholder is on 

official travel, but is unable to submit vouchers and timely pay his or her 

account, through no fault of his or her own. Under such circumstances, the 

APC is to notify the Bank of America that the cardholder is in missioncritical status. Activating this status precludes Bank of America from 

identifying the cardholder’s account as delinquent until 45 days after such 

time as the APC determines the cardholder is to be removed from missioncritical status. According to Bank of America, approximately 800 to 1,000 

cardholders throughout DOD were in this status at any given time 

throughout fiscal year 2001.
Page 81 GAO-03-169 Army Travel Cards

Appendix II

Objectives, Scope, and Methodology ApendxiI

Pursuant to a joint request by the Chairman and Ranking Minority Member 

of the Subcommittee on Government Efficiency, Financial Management 

and Intergovernmental Relations, House Committee on Government 

Reform, and the Ranking Minority Member of the Senate Committee on 

Finance, we audited the controls over the issuance, use, and monitoring of 

individually billed travel cards and associated travel processing and 

management for the Department of the Army. Our assessment covered

• the reported magnitude and impact of delinquent and charged-off Army 

travel card accounts for fiscal year 2001 and the first 6 months of fiscal 

year 2002, along with an analysis of causes and related corrective 

actions;

• an analysis of the universe of Army travel card transactions during fiscal 

year 2001 to identify potentially fraudulent and abusive activity related 

to the travel card; 

• the Army’s overall management control environment and the design of 

selected Army travel program management controls, including controls 

over (1) travel card issuance, (2) APCs’ capacity to carry out assigned 

duties, (3) limiting card activation to meet travel needs, (4) transferred 

and orphan accounts, (5) procedures for terminating accounts when 

cardholders leave military service, (6) segregation of duties to ensure 

that no one individual can control all aspects of a travel transaction, and 

(7) access to Bank of America’s travel card database; and

• tests of statistical samples of transactions to assess the implementation 

of key management controls and processes for four Army units’ travel 

activity, including (1) travel order approval, (2) accuracy of travel 

voucher payments, (3) timely submission of travel vouchers by travelers 

to the approving officials, and (4) timely processing and reimbursement 

of travel vouchers by the Army and DOD. 
Appendix II

Objectives, Scope, and Methodology

Page 82 GAO-03-169 Army Travel Cards

We used as our primary criteria applicable laws and regulations, including 

the Travel and Transportation Reform Act of 1998 (Public Law 105-264),32

the GSA’s Federal Travel Regulation,

33 and the DOD FMR, Volume 9, Travel 

Policies and Procedures. We also used as criteria our Standards for 

Internal Control in Federal Government34 and our Guide to Evaluating 

and Testing Controls Over Sensitive Payments.

35 To assess the 

management control environment, we applied the fundamental concepts 

and standards in our internal control standards to the practices followed by 

management in the seven areas reviewed.

To assess the magnitude and impact of delinquent and charged-off 

accounts, we compared the Army’s delinquency and charge-off rates to 

other DOD services and federal agencies. We also analyzed the trends in 

the delinquency and charge-off data from fiscal year 2000 through the first 

half of fiscal year 2002.

We also used data mining to identify Army individually billed travel card 

transactions for audit. Our data mining procedures covered the universe of 

individually billed Army travel card activity during fiscal year 2001 and 

identified transactions that we believed were potentially fraudulent or 

abusive. However, our work was not designed to identify, and we did not 

32The Travel and Transportation Reform Act of 1998 (Public Law 105-264, Oct. 19, 1998) 

states that, unless specially exempted, federal employees are required to use federal travel 

charge cards for all payments of expenses of official government travel, requires the 

government to reimburse employees who have submitted proper vouchers within 30 days of 

submission of the vouchers, and allows for the offset of pay for employees with undisputed 

travel card charge delinquencies in an amount up to 15-percent of the amount of disposable 

pay of the employee for a pay period.

33Federal Travel Regulation, 41 C.F.R., chapters 300-304, issued by the Administrator of 

General Services, governs travel and transportation allowances and relocation allowances 

for federal civilian employees.

34U.S. General Accounting Office, Standards for Internal Control in the Federal 

Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999). This document 

was prepared to fulfill our statutory requirement under the Federal Managers’ Financial 

Integrity Act to issue standards that provide the overall framework for establishing and 

maintaining internal control and for identifying and addressing major performance and 

management challenges and areas at greatest risk of fraud, waste, abuse, and 

mismanagement.

35U.S. General Accounting Office, Guide to Evaluating and Testing Controls Over Sensitive 

Payments, GAO/AFMD-8.1.2 (Washington, D.C.: May 1993). This document provides a 

framework for evaluating and testing the effectiveness of internal controls that have been 

established in various sensitive payment areas.
Appendix II

Objectives, Scope, and Methodology

Page 83 GAO-03-169 Army Travel Cards

determine, the extent of any potentially fraudulent or abusive activity 

related to the travel card.

To assess the overall control environment for the travel card program at the 

Department of the Army, we obtained an understanding of the travel 

process, including travel card management and oversight, by interviewing 

officials from the Office of the Under Secretary of Defense (Comptroller); 

the Department of the Army; DFAS; Bank of America; and GSA. We 

reviewed applicable policies and procedures and program guidance they 

provided. We visited four Army units to gain an understanding of the travel 

process, including the management of travel card usage and delinquency. 

We visited the DFAS Orlando location to gain an understanding of the 

voucher review and payment process used for two of the four Army 

locations we tested. We also assessed actions taken to reduce the severity 

of travel card delinquencies and charge-offs. Further, we contacted one of 

the three largest U.S. credit bureaus to obtain credit history data and 

information on how credit scoring models are developed and used by the 

credit industry for credit reporting.

We selected four Army locations for testing controls over travel card 

activity based on the relative size of travel card activity at the 13 Army 

commands and of the units under these commands, the number and 

percentage of delinquent accounts, and the number and percentage of 

accounts written off. We selected two units from Army’s Forces Command 

because that command represented approximately 19 percent of travel 

card activity, 22 percent of the delinquent accounts, and 28 percent of 

accounts charged off during fiscal year 2001 across the Army. We also 

selected an Army National Guard location because the Army National 

Guard represented 13 percent of the total travel card activity, 22 percent of 

the delinquent accounts, and 15 percent of charge-offs for fiscal year 2001. 

Special Operations Command represents about 6 percent of Army’s charge 

card activity, 5 percent of the delinquent accounts, and 4 percent of Army 

travel card accounts charged off in fiscal year 2001. Each of the units 

within the commands was selected because of the relative size of the unit 

within the respective command. 

At each of the Army locations we audited we also used our review of 

policies and procedures and the results of our understanding of travel 

processes and other observations to assess the effectiveness of controls 

over segregation of duties among persons responsible for preparing travel 

vouchers, processing and approving travel vouchers, and certifying travel 

voucher payments. In addition, to ensure that work responsibilities were 
Appendix II

Objectives, Scope, and Methodology

Page 84 GAO-03-169 Army Travel Cards

properly segregated at the California National Guard so that no single 

individual can perform or control all key aspects of computer-related 

operations, we performed a limited review of security controls in place at 

that location over access to DOD’s Integrated Automated Travel System 

(IATS). California National Guard personnel used this system to record 

and process travel vouchers. We interviewed managers, users, and 

administrators of IATS at the California National Guard and DFAS’s 

Financial Services Office. We also conducted limited observations of the 

IATS keying process at the California National Guard.

We also reviewed computer system access controls for EAGLS—the 

system used by Bank of America to maintain DOD travel card data. To 

determine whether these controls over EAGLS were effective, we 

interviewed Bank of America officials and observed EAGLS functions and 

capabilities.

To test the implementation of key controls over individually billed Army 

travel card transactions processed through the travel system—including 

the travel order, travel voucher, and payment processes—we obtained and 

used the database of fiscal year 2001 Army travel card transactions. 

Because our objective was to test controls over travel card expenses, we 

excluded credits and miscellaneous debits (such as fees) from the 

population of transactions used to select random samples of travel card 

transactions to review at each of the four Army units we audited. Each 

sampled transaction was subsequently weighted in the analysis to account 

statistically for all charged transactions at each of the four units, including 

those that were not selected. Table 8 presents the sites selected and the 

number of fiscal year 2001 transactions at each location.36

36The populations from which we selected our samples included some transactions that 

were not supported by travel orders or vouchers, such as personal charges made by a 

cardholder. We excluded such transactions from our selections for travel order, voucher, 

and payment process controls. However, we included such transactions in order to project 

the percentage of personal use transactions.
Appendix II

Objectives, Scope, and Methodology

Page 85 GAO-03-169 Army Travel Cards

Table 8: Population of Fiscal Year 2001 Travel Transactions at Army Units Tested

a

Transactions represent charges for sales and cash advances and exclude credits, fees, and other 

miscellaneous debits.

We performed tests on statistical samples of travel card transactions at 

each of the four case study sites to assess whether the system of internal 

control over the transactions was effective, as well as to provide an 

estimate of the percentage of transactions by unit that were not for official 

government travel. For each transaction in our statistical sample, we 

assessed whether (1) there was an approved travel order prior to the dates 

of travel, (2) the travel voucher payment was accurate, (3) the travel 

voucher was submitted within 5 days of the completion of travel, and 

(4) the travel voucher was paid within 30 days of the submission of an 

approved travel voucher. We considered transactions not related to 

authorized travel to be abuse and incurred for personal purposes. The 

results of the samples of these control attributes, as well as the estimate for 

personal use—or abuse—related to travel card activity,37 can be projected 

to the population of transactions at the respective case study site only, not 

to the population of travel card transactions for all Army cardholders. 

We concluded that a control was effective if both the projected point 

estimate of the failure rate and the upper bound of a one-sided 95 percent 

confidence interval associated with the estimate were no more than 5 

Army unit tested

Number of fiscal year 2001

travel transactionsa

Dollar value of fiscal year

2001 travel transactionsa

Ft. Drum, Forces Command 109,443 $ 7,281,275

Ft. Bragg, Forces Command 128,583 10,648,419

Ft. Bragg, Special 

Operations Command 35,021 5,035,743

California National Guard 58,797 5,035,457

37At Ft. Bragg, Forces Command, we found that 85 of 189 transactions appeared to be 

personal (projecting to an estimated 45 percent with a 95 percent confidence interval from 

37.8 percent to 52.4 percent). At Ft. Drum, Forces Command, we found that 17 of 115 

transactions appeared to be personal (projecting to an estimated 14.8 percent with a 95 

percent confidence interval from 8.9 percent to 22.6 percent). At Ft. Bragg, Special 

Operations, we found that 21 of 117 transactions appeared to be personal (projecting to an 

estimated 18 percent with a 95 percent confidence interval from 11.5 percent to 26.1 

percent). At the California National Guard we found that 49 of 166 transactions appeared to 

be personal (projecting to an estimated 29.5 percent with a 95 percent confidence interval 

from 22.7 percent to 37.1 percent). 
Appendix II

Objectives, Scope, and Methodology

Page 86 GAO-03-169 Army Travel Cards

percent. We concluded that a control was ineffective if both the point 

estimate of the failure rate and the lower bound of a one-sided 95 percent 

confidence interval associated with the estimate were greater than 10 

percent. Any point estimate between 5 and 10 percent would generate an 

assessment of partially effective. Tables 9 through 11 show (1) the results 

of our tests of key attributes, (2) the point estimates of the failure rates for 

the attributes, and (3) the two-sided 95 percent confidence intervals for the 

failure rates for each attribute. Table 9 shows the results of our test of the 

key control related to the authorization of travel (approved travel orders 

were prepared prior to dates of travel).

Table 9: Estimate of Fiscal Year 2001 Transactions That Failed Control Tests for 

Approved Travel 

Table 10 shows the results of our test for effectiveness of controls in place 

over the accuracy of travel voucher payments.

Army unit tested

Number of failed

transactions

Estimated failure rate

(95% confidence interval)

Ft. Bragg, Forces 

Command 6 of 96

6.2%

(2.3%, 13.1%)

Ft. Drum, Forces 

Command 0 of 96

0%

(0%, 3.8%)

Ft. Bragg, Special 

Operations Command 3 of 96

3.1%

(.6%, 8.9%)

California National Guard 

1 of 96

1.04%

(.03%, 5.7%)
Appendix II

Objectives, Scope, and Methodology

Page 87 GAO-03-169 Army Travel Cards

Table 10: Estimate of Fiscal Year 2001 Transactions That Failed Control Tests for 

Accurate Travel Voucher Payments

Table 11 shows the results of our tests of two key controls related to timely 

processing of claims for reimbursement of expenses related to government 

travel—timely submission of the travel voucher by the employee and timely 

approval and payment processing of the travel voucher. 

Table 11: Estimate of Fiscal Year 2001 Transactions That Failed Control Tests for 

Timely Submission and Processing of Travel Vouchers

To determine if cardholders were reimbursed within 30 days, we used 

payment dates provided by DFAS. We did not independently validate the 

accuracy of these reported payment dates.

Army unit tested

Number of failed

transactions

Estimated failure rate

(95% confidence interval)

Ft. Bragg, Forces 

Command 18 of 96

18.8%

(11.5%, 28.0%)

Ft. Drum,

Forces Command 10 of 96

10.4%

(5.1%, 18.3%)

Ft. Bragg, Special 

Operations Command 7 of 96

7.3%

(3.0%, 14.4%)

California National 

Guard 18 of 43

41.9%

(27.0%, 57.9%)

Timely voucher submission 

by employee (5-day rule)

Timely reimbursement to the 

traveler (30-day rule)

Army unit tested

Number

of failed

transactions

Estimated

failure

rate (95%

confidence

interval)

Number

of failed

transactions

Estimated

failure

rate (95%

confidence

interval)

Ft. Bragg, Forces 

Command 37 of 96

38.5%

(28.8%, 49.0%) 8 of 96

8.3%

(3.7%, 15.8%)

Ft. Drum, Forces 

Command 21 of 96

21.9%

(14.1%, 31.5%) 5 of 96

5.2%

(1.7%, 11.7%)

Ft. Bragg, Special 

Operations 

Command 29 of 96

30.2%

(21.2%, 40.4%) 7 of 96

7.3%

(3.0%, 14.4%)

California National 

Guard 12 of 43

27.9%

(15.3%, 43.7%) 26 of 43

60.5%

(44.4%, 75.0%)
Appendix II

Objectives, Scope, and Methodology

Page 88 GAO-03-169 Army Travel Cards

We briefed the following officials on the details of our review, including our 

objectives, scope, and methodology and our findings and conclusions: 

DOD managers, including officials in DFAS; Army managers, including 

Office of the Assistant Secretary of the Army (Financial Management and 

Comptroller) officials; Army Forces Command and Special Operations 

Command unit commanders; unit-level APCs; Army National Guard Bureau 

management and the California National Guard Adjutant General; and 

Bank of America officials. We incorporated their comments where 

appropriate. With the exception of our limited review of access controls at 

the California National Guard, we did not review the general or application 

controls associated with the electronic data processing of Army travel card 

transactions. We conducted our audit work from December 2001 through 

July 2002 in accordance with U.S. generally accepted government auditing 

standards, and we performed our investigative work in accordance with 

standards prescribed by the President’s Council on Integrity and Efficiency. 

We received DOD comments on a draft of this report from the Under 

Secretary of Defense (Comptroller) dated September 30, 2002, and have 

reprinted those comments in appendix V.
Page 89 GAO-03-169 Army Travel Cards

Appendix III

Army Major Command Delinquency Rates ApendxiI

Table 12 shows the travel card delinquency rates for Army’s major 

commands (and other Army organizational units at a comparable level) 

that had outstanding balances over $1 million during the 2-year period 

ending March 31, 2002. The Army’s commands and other units are listed in 

descending order based on their respective delinquency rates as of

March 31, 2002. The delinquency rates shown represent the total amount 

delinquent (amounts not paid within 61 days of the travel card monthly 

statement closing date) as a percentage of total amounts owed by the 

command’s travel cardholders at a point in time.

Table 12: Army Major Command Delinquency Rates (by Quarter) for the 2 Years Ending March 31, 2002

a

Commands are ranked by the largest percentage of dollars delinquent as of March 31, 2002. 

Commands with a March 31, 2002, balance outstanding under $1 million have been combined into “All 

other commands combined.”

b

U.S. Army orphan accounts are (1) Army travel card accounts that are not under the purview of any 

APC and (2) accounts Banks of America inherited from the previous government travel card contractor 

that were not linked to any Army command and accounts for which the accountable APC left or was 

relocated without having a replacement designated.

c

U.S. Army Operating Agency 22 consists of various Army headquarters and administrative offices, 

such as the Secretary of the Army, the Assistant Secretary of the Army for Financial Management and 

Comptroller, the Army Audit Agency, and the Army Judge Advocate General.

Source: GAO calculation based on information provided by Bank of America.

Commanda

June

2000

Sept.

2000

Dec.

2000

Mar.

2001

June

2001

Sept.

2001

Dec.

2001

Mar.

2002

U.S. Army Forces Command 22.2 25.1 28.7 23.1 18.6 22.1 30.5 23.7

U.S. Army Pacific Command 19.5 25.1 28.2 19.8 15.0 18.7 22.5 18.9

U.S. Army National Guard 16.9 16.4 22.9 13.6 13.4 16.2 20.9 18.4

U.S. Army Europe and 7th Army Command 17.8 20.4 21.1 15.8 13.0 17.1 22.5 16.9

U.S. Army orphanb 16.2 22.2 40.1 38.1 23.1 20.4 24.4 16.9

U.S. Army Reserve 14.3 16.0 20.9 13.1 11.6 11.9 21.4 15.3

U.S. Army Recruiting Command 22.5 19.2 17.4 20.4 13.6 13.7 10.6 13.1

U.S. Army Special Operations Command 16.9 17.4 17.9 9.9 10.1 10.6 16.6 12.0

U.S. Army Operating Agency 22c 8.7 11.1 11.4 7.4 7.0 8.7 12.2 9.0

U.S. Army Training and Doctrine Command 10.8 11.7 13.9 8.8 8.4 10.2 12.1 8.2

U.S. Army Medical Corps 12.3 13.9 14.8 9.9 8.1 8.0 12.3 7.7

U.S. Army Intelligence and Security Command 10.3 12.1 11.9 5.9 5.6 6.0 4.2 5.8

U.S. Army Corps of Engineers 4.8 5.6 6.5 4.5 3.3 3.9 5.8 3.6

U.S. Army Material Command 3.4 3.6 4.4 2.1 2.1 2.3 2.4 1.5

All other commands combined 8.5 9.7 11.1 8.4 5.9 6.8 7.2 6.9

Army-wide 13.9 15.5 18.5 13.3 10.7 12.5 16.6 12.8
Page 90 GAO-03-169 Army Travel Cards

Appendix IV

Army Personnel Grade, Rank, and Associated 

Basic Pay Rates ApendxiIV

Tables 13 and 14 show the grade, rank (where relevant), and the associated 

basic pay rates for 2001 for Army’s military and civilian personnel, 

respectively. The basic 2001 pay rates shown exclude other considerations, 

such as locality pay and any allowances for housing or cost of living. 

Table 13: Army Military Grades, Ranks, and Associated Basic Pay Rates for Fiscal 

Year 2001

a

Officers’ ranks includes warrant officers (denoted by WO) and commissioned officers (denoted by O).

Source: U.S. Army.

Table 14: Army Civilian Grades and Associated Basic Pay Rates for Calendar 

Year 2001

Source: Office of Personnel Management.

Military grade Military rank 2001 pay

Enlisted personnel

E-1 to E-3 Private $11,033 to $14,449

E-4 to E-6 Corporal to Staff Sergeant $17,739 to $26,253

E-7 to E-9 Platoon Sergeant to Sergeant Major $31,563 to $46,445

Officersa

WO-1 to WO-5 Warrant Officer $29,302 to $60,152

O-1 to O-3 First Lieutenant, Second Lieutenant, 

Captain $26,731 to $45,339

O-4 to O-6 Major, Lieutenant Colonel, Colonel $56,635 to $84,317

O-7 to O-10 General $98,960 to $132,826

Civilian grade 2001 pay

General schedule employees

GS-1 to GS-3 $14,244 to $22,712

GS-4 to GS-5 $19,616 to $28,535

GS-6 to GS-8 $24,463 to $39,143

GS-9 to GS-12 $33,254 to $62,686

GS-13 to GS-15 $57,345 to $103,623

Senior Executive Service

ES-01 to ES-06 $109,100 to $125,700
Page 91 GAO-03-169 Army Travel Cards

Appendix V

Comments from the Department of Defense ApendxiV
Appendix V

Comments from the Department of Defense

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Appendix V

Comments from the Department of Defense

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Appendix V

Comments from the Department of Defense

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Appendix V

Comments from the Department of Defense

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Appendix V

Comments from the Department of Defense

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Appendix V

Comments from the Department of Defense

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Appendix V

Comments from the Department of Defense

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Appendix V

Comments from the Department of Defense

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Appendix V

Comments from the Department of Defense

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Appendix V

Comments from the Department of Defense

Page 101 GAO-03-169 Army Travel Cards
Appendix V

Comments from the Department of Defense

(192066) Page 102 GAO-03-169 Army Travel Cards
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